Indian sugar climbs as output fall spurs spot buys

(Reuters) - Indian sugar futures climbed for a fifth session on Monday, helped higher by active spot buying by stockists expecting a fall in output and strong demand from drinks makers in the next few months.

At 2:38 p.m. (0908 GMT), the February contract NSMG9 on the National Commodity and Derivatives Exchange was up 0.50 percent at 2,010 rupees ($41.4) per 100 kg, while the March contract NSMH9 had risen 0.74 percent to 2,047 rupees.

"Stockists have become very active in last few days. They are anticipating a sharp drop in production," Veeresh Hiremath, an analyst at Karvy Comtrade Ltd, said.

Demand from bulk buyers like ice-cream and beverage makers usually rises in the summer months and stockists are expecting prices to move up then, he said.

Recent industry forecasts have pegged India's production at below 19 million tonnes in the 2008/09 crop year, down sharply from 26.3 million tonnes a year earlier.

A fall in output in the top producing state has bolstered this view.

Millers in the western state of Maharashtra produced 2.7 million tonnes of sugar up to Jan. 13, down 6.9 percent from the same period a year ago, a senior official said on last week. [ID:nBOM414325]

Spot sugar prices in Maharashtra rose 0.22 percent to 1,964.35 rupees, taking gains to about 5 percent this month. ($1=48.6 rupees)