* Dealers eye condition of Ivory Coast cocoa mid-crop
* Sugar bounces after becoming oversold
(Adds trade comment, updates prices)
By Sarah McFarlane and David Brough
LONDON, April 15 (Reuters) - Cocoa prices edged higher on Friday after first-quarter cocoa grindings rose in Malaysia, North America and Europe, as cocoa processors utilised capacity around the world to compensate for lost capacity in Ivory Coast.
ICE arabica coffee rose in thin volumes, while sugar was also higher, bucking the trend for weakness across the commodities complex after China reported its economy grew 9.7 percent in the first quarter from a year earlier, but consumer inflation hit a 32-month high in March. [ID:nL3E7FE1IE
Cocoa grindings, a measure of demand, in Malaysia, Asia's largest grinder, rose 10.8 percent in the first quarter of 2011 from a year before, while grindings in North America rose 2.16 percent and in Europe they were up 3.5 percent, as activity moved from Ivory Coast to elsewhere.
The lifting of Ivory Coast's cocoa export ban on Thursday took the top cocoa producer a step closer to resuming exports after a disputed presidential election saw the industry come to a standstill.
"Everybody expects Ivory Coast infrastructure will be up and running pretty soon, as for the banking system we don't know yet, that's the big question," a European trader said. "We need the banking system to be up and running to start exporting."
Dealers also said they were awaiting information on the state of the country's future cocoa output.
"We still have to find out what the mid-crop is going to be like," a European dealer said.
New York's July cocoa contract on ICE Futures U.S. reversed early gains to stand down $2 at $3,125 per tonne at 1437 GMT. London's July cocoa rose 4 pounds to 1,964 pounds per tonne in modest volume of 2,320 lots.
"With growing demand and a cocoa sector that is underinvested-in, the correction in prices (from the highs) should be tempered," Rabobank said in a monthly report.
LACK OF COFFEE HEDGING
Arabica coffee prices were higher as dealers said there was a lack of hedging to cap upward moves.
"Clearly there's not the hedging pressure there," a London-based broker said.
"Traders are reluctant to take on much commitment, particularly on arabicas because of the high cost of finance on the margins for the exchange. Plus there's counterparty risk if the market goes up," the broker said.
New York's July arabica contract rose 3.75 cents or 1.3 percent to $2.8890 per lb at 1440 GMT. London's July robusta coffee contract was down $21 or 0.85 percent, at $2,448 per tonne in reasonable volume of 5,573 lots.
ICE raw sugar futures bounced higher after being over-sold on Thursday, and traded up 0.45 cent or 1.8 percent higher at 24.89 cent, below the 30-year peak of 36.08 cents a lb touched on Feb. 2.
"It's really a reaction to getting oversold," a veteran London sugar futures dealer said. "Maybe people are buying May New York and selling May London."
Dealers said they expected a large delivery tonnage against expiry of the Liffe May white sugar futures contract on Friday, possibly around 500,000 tonnes, likely to include Brazilian, Thai and Indian sugars. The announcement of the delivery details is expected on Monday.
"The key support for the market seems to be the 23 cent level on the July and the bears will want to settle the market below this level," said Thomas Kujawa of brokerage Sucden Financial.
ICE July was up 0.26 cent or 1.1 percent to 23.32 cents a lb at 1444 GMT.
Larger-than-expected output from Thailand and Pakistan, as well as a big crop from top producer Brazil, weighed on ICE raw sugar futures, which closed at a six-month low on Thursday.
Dealers said Thai, Brazilian and Central American sugars could be delivered against expiry of the ICE May contract on April 29, but it was still too early to forecast a tonnage.
They said they were waiting to see how much of the 300,000 tonnes of EU import quotas they would be awarded. (Editing by James Jukwey)