Raw sugar futures settled at a seven-month high on Friday, joining a broad based commodities rally, with one large bank adding to bullishness by revising down a forecast for global sugar supplies.

US cocoa futures firmed but coffee bucked the trend and reversed lower, concluding the biggest weekly per centage loss in seven weeks in a continued fall from 13-year highs.

The US dollar fell against a basket of currencies to its lowest level since February, as markets anticipated that Federal Reserve Chairman Ben Bernanke in a speech later Friday might signal more purchases of government debt to stimulate economic growth. Equities rose.

A weaker dollar makes commodities cheaper for holders of other currencies and helped lift the Reuters-Jefferies CRB index of 19 commodity futures more than 1 per cent.

ICE October raw sugar futures jumped 0.74 cent or 3 per cent to end at 25.44 US cents per lb, with most-active March up 0.78 cent to finish at 24.40 cents, the highest settlement for the second position since February. It also marks seven straight weeks of gains.

London December white sugar settled up $14.70 at $633.10 per tonne.

ABN AMRO/VM Group cut its 2010/11 (Oct-Sept) global sugar surplus forecast to 1.2 million tonnes from a previous forecast of 5.14 million, due to lower output in many parts of the world and higher consumption.

Dealers said the forecast helped lift sugar futures, along with a late-day push by investor and fund buying.

Mexico's planned import quota of 100,000 tonnes of sugar was seen as insufficient given the weather damage to Mexico's fields over the last two years. Market participants expected the country, traditionally an exporter, to need additional sugar.

'The 100,000 tonnes is unlikely to be enough and the government is expected to soon grant another 125,000 tonnes (some say 150,000 tonnes),' a European broker said in a daily market report.

'Overall, the stories seem to be favoring the bulls at the moment,' said Thomas Kujawa of Sucden Financial Sugar.

Robusta coffee futures dealing on Liffe received a boost on Thursday when Vietnam Coffee and Cocoa Association Chairman Luong Van Tu suggested Vietnam's harvest could be delayed due to adverse weather, traders then said on Friday the harvest would start in November as usual.

Much-needed rain in Brazil's unusually dry coffee belt is expected next week, pressuring prices.

'Fundamentals may be coming more into play, as concerns over rainfall in Brazil may now be easing and new crop arabica starts to become available to relieve supply concerns, adding to downside pressures,' Ralph Hawes at Sucden Financial said.

ICE December arabica coffee futures dropped 1.05 cents to finish at $1.8060 per lb, finishing the week down 4.6 per cent, the biggest weekly losses in seven weeks. Liffe November robusta coffee fell $10 to close at $1,727 per tonne.

'There are some forecasts for rains to come to Brazil next week and those will be very beneficial for coffee because those trees are going to be very stressed,' said Jack Scoville, analyst for brokers The Price Group in Chicago.

Cocoa crop

ICE cocoa followed the commodity complex quietly higher, supported by the weaker dollar, but analysts and dealers said the overall price outlook remained subdued.

Heavy rains in Indonesia and Malaysia, however, helped lift the market due to concern about Asian production, Scoville said.

ICE December cocoa rose $14 to finish at $2,794 per tonne, finishing the week up 1.7 per cent. Liffe December cocoa traded up 4 pounds to close at 1,883 pounds a tonne.

Dealers said top producing region West Africa's crop continued to look good with weather conditions mostly favorable although forecast rain could be a worry for crop quality. – Reuters