UPDATE 1-Indian sugar futures rise on festival demand hopes

(Updates to close)

MUMBAI, Aug 28 (Reuters) - Indian sugar futures rose for a second day on Thursday on a likely increase in demand during upcoming festivals and after a trade official forecast output may drop sharply next crop year in a key growing region.

"We are heading towards festival season and traders are expecting improvement in demand," said Ravi Bhushan, an analyst with ICICI Direct.

Demand for sugar usually increases during Ganesh Chaturthi, a popular 12-day Hindu festival which starts Sept. 3.

Sugar output in the western state of Maharashtra, the country's biggest producer, could slump to 5.2 million to 5.7 million tonnes in the crop year beginning October, a senior trade official said on Tuesday. [ID:nBOM253296]

The state's output in year ending September is expected at 9.1 million tonnes, or about a third of India's estimated total output of about 27 million tonnes.

Sugar futures were also supported by firmness in crude oil prices, which rose for a fourth straight day to above $119 a barrel, the ICICI analyst said.

Following are the closing prices of sugar futures in rupees per 100 kg on the National Commodity and Derivatives Exchange <0#NSM:>

Contract Reuters Code Closing Price Change in %