SOFTS-Cocoa prices extend rally off nearly two-year lows

NEW YORK, Nov 28 (Reuters) - Cocoa prices traded on the ICE exchange surged on Friday, extending its rally off this week's two-year lows on the view that bearish news is priced in for now and technical signals point to oversold conditions.

COCOA

London cocoa LCCc2 ​​​settled up 158 pounds, or 4%, to 4,069 pounds per metric ton. Prices had fallen to 3,650 pounds on Tuesday, their lowest level in nearly two years.

New York cocoa CCc2 rose 8.1% to $5,504 a ton, playing catch-up with London after U.S. markets were closed on Thursday for the Thanksgiving holiday.

"I guess we had some fund short covering," said one U.S.-based cocoa broker, about this Friday's session.

Cocoa traders are increasingly nervous given funds' short position in what is a technically oversold market, dealers said.

The chocolate ingredient has been under pressure overall, thanks to increased port arrivals in top grower Ivory Coast, expectations the European Union will again delay its anti-deforestation law and the U.S. move to slash import tariffs.

"Nevertheless, we expect prices to remain historically elevated and volatile, due to ongoing structural challenges and climate-related risks," BMI, a unit of Fitch Solutions, said in a note.

COFFEE

Robusta coffee LRCc1 settled up $26, or 0.6%, at $4,565 a ton.

The contract gained 6.4% last week amid the strong rains in Vietnam, but rose only 1% this week.

Dealers noted that the harvest in Vietnam remains delayed after rains, floods and landslides, while quality concerns prevail just as another storm looms.

Storm Koto is not expected to directly impact the coffee belt, though dealers said it does mean more rainfall on already saturated soils, further harvest delays and risks that crop quality might be compromised.

Arabica coffee KCc2 rose 0.4% to $3.812 per lb. Arabica gained 3.2% in the week.

SUGAR

Raw sugar SBc1 ​​​settled up 0.07 cent, or 0.5%, at 15.21 cents per lb, posting a weekly gain of 2.9%.

"Analysts have started to temper their forecasts for the global surplus in 2025/26," broker ADM ISI said.

It added that prices had, at their lows earlier this month, marked a 50% fall from the November 2023 12-year high. This slump has "set the market up for a corrective rally," the broker said.

White sugar LSUc1, however, fell 0.2% to $435.50 a ton. The market gained 2.7% this week.