Indian sugar futures rise but crushing weighs

MUMBAI, Nov 20 (Reuters) - Indian sugar futures nudged higher on Thursday on good spot demand in a key market in north India and after a leading producer said prices should rise because of the output was expected to be lower.

The rise was, however, held in check by the peak crushing season in southern and western markets when availability rises.

At 3:28 p.m. (0928 GMT), the December contract NSMZ8 on the National Commodity and Derivatives Exchange was up 0.28 percent at 1,782 rupees ($35.4) per 100 kg and the January contract NSMF9 rose 0.27 percent to 1,861 rupees.

The November contract NSMX8, which expires on Thursday, was up 0.58 percent at 1,742 rupees.

Spot prices in Delhi rose 0.33 percent to 1,861.30 rupees.

A senior official at Triveni Engineering & Industries, a leading sugar producer, said on Thursday prices have risen to around 18 rupees a kilogram from 14.5 rupees a year ago and should rise further due to an expected drop in output. [ID:nDEL398323]

Analysts and traders have forecast India's sugar output may drop by 16-23 percent to 20-22 million tonnes in the crop year ending in September 2009 from 26.3 million last year following diversion of land for other crops such as oilseeds. ($1=50.4 rupees) (Reporting by Abhishek Shanker)