UPDATE-Illovo sees 2009 sugar production up at 1.98 mln T

* Sees cane production 1.5 mln T higher y/y

* Expects to complete Zambian rights to issue by August

(Adds details, shares)

JOHANNESBURG, July 14 (Reuters) - South Africa's Illovo Sugar (ILVJ.J) said on Tuesday it expects to produce 1.98 million tonnes of sugar this year, some 275,000 tonnes more than the previous year.

Cane production is expected to rise by 1.5 million tonnes to 6.5 million tonnes, it said.

"The world sugar market continues its upward trend on the back of an all time high global deficit in production, compared to demand," Illovo Chairman Mount Edgecombe said in his address at the annual general meeting.

"Generally, climatic conditions have been good across the areas in which the group operates and favourable to crop growth."

Illovo said a rights issue by its Zambian subsidiary, Zambia Sugar, received the necessary approvals and would be completed by the end of August.

The company said it expects commercial planting of sugar cane in Mali to commence in the first quarter of 2010, with the first production seen in December the following year.

"The Malian operation will ultimately produce 195,000 tonnes of sugar and 15,000 kilolitres of ethanol for fuel blending and generate sufficient electricity for the agricultural and factory operations," Edgecombe said. He said the the downstream plant at Sezela continues to perform well with production forecast to be similar to that of last year.

Shares in the company were trading 1.49 percent stronger at 30 rand by 1323 GMT, compared with a 2.16 percent stronger All-Share index . (Reporting by Agnieszka Flak)