"We don't anticipate much action between now and the New Year holiday, but given the low liquidity, it is possible volatility may increase as size players can 'bully' markets under these conditions," said Nick Penney of brokerage Sucden Financial. Country Hedging Inc analyst Sterling Smith added: "It's the silly week. We see a little bit of shorts driving (markets) up. And then they (liquidate) and go home." Raw sugar saw early follow-through buying lift it to three-week highs, but that dried up when the dollar firmed and the modest pace of buying prompted many speculators to sell. The volume of business in US soft commodity markets picked up as it ranged from 5 to almost 50 percent below the 30-day norm, Thomson Reuters data reported. On Tuesday, trades were running at 70 to 83 percent below the 30-day average. ICE March raw sugar futures in New York fell 0.48 cent to close at 23.13 cents a lb, having hit a three-week high of 24 cents. London's March white sugar futures lost $12.10 or almost 2 percent to end at $599.10 a tonne. Raw sugar has fallen sharply since reaching a 30-year peak around 36 cents a lb earlier this year. It is now on track to be one of the five weakest commodity markets in 2011. Penney said: "The last week of the year and the first week of the New Year is the traditional period when talk of fund reweighting circulates in the market. There has also been physical interest." ARABICA COFFEE CLIMBS, COCOA FALLS Arabica coffee futures jumped to a three-week high on fund short-covering after the benchmark March hit $2.255 per lb. "Coffee is up almost exclusively on short covering. Technical aspects of the market were positive," said one veteran coffee dealer in New York. Smith said questions about poor weather affecting coffee supplies going into 2012 are supportive for futures. "Coffee's fundamentals can support higher prices," he said. ICE May arabica futures were up 3.90 cents or 1.75 percent to close at $2.2675 per lb. London's March robusta coffee futures traded down to a two-month low, basis the second month, and a contract low of $1,792 a tonne due to hedging by top robusta producer Vietnam. The contract ended down $13 at $1,838 a tonne. The spot arabica contract is on track to close the year down roughly 7 percent, versus a 77 percent rise in 2010. Cocoa futures fell, with US beans tumbling nearly 4 percent in thin dealings, pressured by the sharply falling sterling against the US dollar. "It's always hard to make head or tails at the end of the year. It's a general bearish day because of the dollar and the stock market," said Shawn Hackett, president of Hackett Financial Advisors in Florida. "Because the volume is so light, it's hard to make too much of it." New York's March cocoa contract dropped $83 or almost 4 percent to finish at $2,133 a tonne. London's March cocoa contract lost 17 to close at 1,390 pounds a tonne. The US cocoa futures market returned to a slight discount against the London market, after trading at a rare premium for the past three sessions. The US cocoa market is on track on to close 2011 down 30 percent, which would be its biggest annual decline since 1999 and the second-worst performer on the Thomson Reuters/Jefferies CRB. Prolonged drought mixed with the dry harmattan wind last week in most of Ivory Coast's cocoa regions could reduce the size and hamper the quality of Ivorian main cocoa crop, farmers said on Tuesday.