ANALYSIS-UPDATE 1-Cocoa's star bright after stellar 2008

(updates with London prices hitting 23-year high on Tuesday)

By David Brough

LONDON, Dec 23 (Reuters) - Savvy investors should have piled into cocoa in 2008: with gains of 71 percent in London it was the best performer among the major financial markets, and could outperform again in 2009 because of worries over supply.

Cocoa futures have put in a commanding performance this year, outperforming other asset classes as the global economy switched from boom to bust.

"Cocoa has good fundamentals -- sell it at your peril," said Lars Steffensen, managing director of London-based commodities fund Ebullio Capital Management.

Traders say global cocoa supplies are looking tight, while demand is holding up well, a story unlike that of other raw materials such as oil and industrial metals, whose prices slumped as economic growth fizzled.

Since the end of 2007, London cocoa futures LCCc2 have surged 71 percent and U.S. cocoa CCc1 has risen by 31 percent; while crude oil CLc1 plunged 59 percent, copper MCU3 dropped 56 percent, and U.S. wheat Wc1 fell 36 percent.

The Reuters-Jeffries commodities index .CRB, a global commodities benchmark heavily weighted to oil, has fallen by 40 percent since the last trading day of 2007.

Cocoa's stellar performance is primarily due to its bullish market fundamentals -- a shortage of beans emerging from top West African producers, notably Ivory Coast and Ghana.