By Stuart Wallace

Nov. 6 (Bloomberg) -- White sugar declined for a second day in London after Sucres et Denrees SA forecast a 12.6 percent advance in output in the Center-South region of Brazil, the world's biggest producer. Robusta coffee also dropped.

Output may reach 27.3 million to 28.6 million metric tons in the region, up from an estimated 25.4 million this marketing year, the Paris-based researcher said late yesterday in an e- mailed report. Global supply will still fall short of demand by 3 million tons in 2009, after two years of surplus, the group said.

``Sugar fundamentals are becoming much more constructive but the context of a gloomy economic environment may prevent prices from reacting very positively in the short term,'' Sucden said.

White sugar for March delivery fell $3.70, or 1.1 percent, to $348 a metric ton as of 11:12 a.m. on London's Liffe exchange. Raw sugar for March delivery fell 0.12 cent, or 1 percent, to 12.52 cents a pound on ICE Futures U.S. in New York.

World sugar production will drop 5.2 percent in 2008-09 as farmers switch to crops such as corn and soybeans, the United Nations' Food and Agriculture Organization said today.

Production will decline to 160.9 million tons, the group said in a report on its Web site. Demand will advance 2.2 percent to 163 million tons. That will still leave end-of-season stocks at 76.5 million tons, the FAO said.

F.O. Licht also expects global sugar stockpiles to shrink at the end of the next season, senior commodity analyst Stefan Uhlenbrock told a conference in Paris yesterday.

The International Sugar Organization yesterday said sugar demand will outpace supply for two seasons as Indian and European production declines and consumption rises.

Among other agricultural commodities traded on Liffe, cocoa for December delivery rose 9 pounds, or 0.7 percent, to 1,274 pounds ($2,032) a ton. Robusta for January delivery declined $36, or 2 percent, to $1,764 a ton.

To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net