* Coffee rally appears poised for further gains
* Cocoa rally loses steam, tumbles on long liquidation
* Sugar weakens, but market seen pinned in a band (Recasts lead, updates with closing prices of raw sugar and arabica coffee markets in New York)
By Rene Pastor and Sarah McFarlane
NEW YORK/LONDON, March 9 (Reuters) - U.S. arabica coffee futures hurtled to a 34-year top Wednesday and looked poised to charge higher, boosted by investment fund buying and slim supplies.
Cocoa futures retreated further from last week's 32-year peak but remained propped up by civil war in top grower Ivory Coast, while sugar edged down in range-bound business.
ICE's May arabica coffee futures soared 7.65 cents to close at a 34-year settlement peak at $2.9485 a lb, having also hit a 34-year intra-day top at $2.9665.
It was the third day in a row that arabica futures hit a 34-year high and the market appears to have posted its biggest three-day advance since December.
The rally sparked robusta futures, with London's May robusta coffee climbing $95 or 3.86 percent to end at 2,557 per tonne, after hitting a three-year top at $2,586.
"The market is very stout and well supported," said Sterling Smith, a senior analyst for brokerage Country Hedging Inc in St. Paul Minnesota. "Beans remain in tight supply and combined with steady demand is creating plenty of room for speculators (to push coffee higher)."
Technically, the market is poised to carve out a topside breakout for arabicas.
"The market is heading for the long-term channel resistance at 306 (cents a lb or $3.06)," technical analyst Stephanie Aymes of Societe Generale said in a market note on Wednesday. "The recent break above the steep bullish channel in place since last June highlights the strength of the uptrend."
Supplies of high quality arabica coffee had been tightened by a succession of below normal crops in key arabica producer Colombia.
"Colombian production is slowly recovering from the low levels of the three preceding crop years and an increase is expected in crop year 2011/12," the International Coffee Organization said.
Colombia is expected to produce around 9 million bags in 2010/11, up from around 8.1 million bags the previous season, the ICO said. But the crop remains significantly below the 12.5 million bags produced in 2007/08.
Robusta coffee futures on Liffe rose to a three-year high, boosted mainly by spillover strength from the arabica market.
"The overall supply picture for robusta isn't as tight as arabica, but because Vietnam are holding back coffee, their domestic prices are at record highs," CoffeeNetwork analyst Thompson said.
COCOA HIT BY LATE LIQUIDATION, SUGAR FALLS
Cocoa futures were hammered late by long liquidation which was triggered by the failure to carve out higher ground in a market that hit a 32-year peak due to the civil war in top producer Ivory Coast.
The March/May spread in London cocoa saw March dip into a discount to May for the time since January 14, an indication that worries over a supply crunch due to the Ivorian crisis seem to be easing.
Commerzbank said in a market note "an unusually high supply of cocoa beans is being reported from neighboring countries, a part of which is likely to be smuggled beans from Ivory Coast."
New York's May cocoa contract fell $106 or by 2.9 percent to settle at $3,527 per tonne, well below the 32-year intra-day high of $3,775. Liffe's May cocoa contract lost 61 pounds to finish at 2,259 pounds per tonne.
Sugar futures tumbled as well on investor liquidation although the market is seen staying in a wide trading band at this time.
"We believe our 31.00/29.00 (cents a lb) range on May NY will hold," Sucden Financial said in a market note.
New York's May raw sugar contract shed 0.28 cent to close at 30.42 cents per lb. London's May white sugar futures fell $12 to finish at $751.10 per tonne.
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