SOFTS-Markets mixed, cocoa up on options buying

* Firm dollar puts sugar under pressure

* Options buying spurs rise in cocoa market

* Volatile trade seen before long U.S. holiday (Recasts, updates prices, market activity to close; adds second byline, dateline, previously LONDON)

NEW YORK/LONDON, Nov 20 - Soft commodity futures were mixed on Friday as investors squared positions before the long Thanksgiving break next week, with cocoa prices climbing on option-related buying, analysts said.

U.S. soft commodity markets will be closed next Thursday for Thanksgiving and next Friday's session will shut early.

"It was a mixed bag of position squaring going into the holiday week," said Sterling Smith, an analyst for brokers Country Hedging Inc. in Minnesota.

"Next week will be a very hazardous week. A lot of the bigger trading desks will be taking the whole week off," Smith said, adding thin volumes often lead to volatile business.

Cocoa staged a pop on short-covering before December options in the London white sugar market expire at the end of the month.

London's March cocoa futures added 76 pounds to conclude at 2,174 pounds per tonne. New York's March cocoa contract jumped $102 to settle at $3,299 per tonne.

"With the rally up today, people who have sold the calls, basically ... to cover the delta," said Marcelo Dorea, partner of hedge fund Round Earth Capital in New York.

The delta is the measure of the relationship between an option price and the underlying futures contract.

Smith added that funds piled in as well when New York cocoa managed to hold support at $3,150 because it showed the bean market was in a "solid uptrend."

SUGAR SLIPS ON FIRM DOLLAR, COFFEE MIXED

Sugar futures lost ground as the dollar extended its recovery after dropping this week to fresh lows.

Smith said sugar is "having trouble getting upside momentum" and could test support at 22.10 and 22 cents.

ICE Futures' March raw sugar contract in New York fell 0.27 cent to finish at 22.47 cents per lb. London's December white sugar contract fell $10.90 to end at $597.70 per tonne.

Smith and other analysts said sugar market players would need to see what kind of consumer interest develops as prices go lower given the sizable imports expected from No. 1 consumer India.

Indian sugar imports are seen ranging from 3.0 to 7.0 million tonnes through September 2010. Demand is also seen coming from Bangladesh, Pakistan, Indonesia, Mexico and the United States.

"You have got to be more bullish on the whites than the raws, because the whites are potentially subject to strong consumer demand," said Rabobank trader Jake Weatherall.

Coffee futures were mixed.

London's January robusta contract rose $17 to close at $1,344 per tonne. New York's March arabica contract shed 1.30 cents to close at $1.3575 per lb.