* Raw sugar near three-decade peak

* White sugar in record territory

* Despite rallies, most analysts see higher prices

World sugar prices have surged to historic levels as India, the largest sugar consumer, turns to imports after a poor monsoon decimated its cane crop.

On Wednesday, New York raw sugar futures hit a 28-1/2-year peak at 23.33 cents per pound. The spot white sugar contract in London surged to an all-time high on Thursday at $589.90 a tonne.

Most analysts expect India sugar imports of around 5 million tonnes in the 2009/10 marketing year, up from 2.5 million tonnes in 2008/09, and there is speculation that it could import as much as 8 million tonnes.

Still, with sugar prices up as much as 91 percent since the beginning of the year, and open interest above 850,000 contracts, sugar may be vulnerable to a technical correction.

BUY

I would buy sugar, said Sterling Smith, a senior analyst for Country Hedging Inc in Minnesota. The market still has plenty of upside to it.

Most analysts now feel that a move toward 25, or even 27 cents, is likely in the days ahead. India is not the only source of stepped-up demand, they say, pointing to likely import orders from Pakistan and the United States.

Jonathan Kingsman, managing director of Lausanne-based consultancy Kingsman SA, said sugar prices were likely to consolidate in the near term and then climb as Indian physical demand picked up on the dips.

I think there's a very big fundamental deficit looming on sugar, which suggests the prices should go higher at some stage, Kingsman told Reuters television.

I don't see any reason to sell it (at this time), added Jack Scoville, a vice president and analyst at brokers The Price Futures Group.

Smith believes this is an ideal time to buy sugar put option contracts, which give the holder the right to sell the product at a given price by a given time.

Effectively, analysts said, this provides a floor and locks in one's profit in the sugar market, insulating an investor from the sharp swings in values of sweetener futures.

India New York Medicine