By Pratik Parija Dec. 1 (Bloomberg) -- Sugar mills in India’s biggest cane- growing state are delaying imports after resolving a dispute with cane suppliers, reducing demand that’s helped send global prices to a 28-year high. Uttar Pradesh mills expect domestic sugar prices to fall as production resumes after growers ended a boycott on supplies of cane, Arhant Jain, executive president finance at Dhampur Sugar Mills Ltd., the fourth-biggest producer, said yesterday. Any delay in purchases by India, the biggest importer this year, may cool the rally in sugar after prices almost doubled this year. The country became a net buyer for the first time since 2006 this year as drought damaged crops and excessive rains in Brazil squeezed global supplies. Wholesale prices in Mumbai are up 82 percent this year. “We’re waiting for prices to stabilize before deciding on our import plans,” said Jain in a telephone interview from New Delhi. “We can’t say if local prices are real” because not all 135 units in Uttar Pradesh have started crushing, he said. Raw-sugar futures for March delivery fell 0.6 percent to 22.64 cents a pound in New York yesterday. Earlier, the most- active contract reached 23 cents, the highest since Nov. 20. As many as 90 units in Uttar Pradesh began crushing after a price dispute with farmers ended last week, said Shyamlal Gupta, secretary general of the Uttar Pradesh Sugar Mills’ Association. The rest will start in the first week of this month, he said. “Domestic prices will cool in the next two months once crushing in the state begins fully,” G.S.C. Rao, executive director at Simbhaoli Sugars Ltd. Protests Opposition lawmakers stalled parliament twice last month, demanding cane farmers must get more than 130 rupees per 100 kilograms announced by the government. Mills in Uttar Pradesh, including those owned by Bajaj Hindusthan Ltd., the top producer, resolved the dispute by offering 190 rupees. India had a 2.5 million ton stockpile of refined sugar on Sept. 30 after producers imported 2.29 million tons of raw and 225,000 tons of white varieties in the 2008-2009 season, Junior Food Minister K.V. Thomas told the parliament Nov. 20. Reserves of imported raws totaled 1.26 million tons on Sept. 30. The country needs to import 6 million to 7 million tons in the season started Oct. 1, compared with 3.5 million tons in the previous year, Kushagra Bajaj, joint managing director of Bajaj Hindusthan, said in an interview on Nov. 24. Production may be little changed at 14.5 million to 15 million tons, Bajaj said. Purchases in 2010-2011 may drop to 4 million to 5 million tons as output rebounds to 19 million to 20 million tons, he said. Output Rebound India sugar output may jump to 17.68 million tons in the season started Oct. 1 after farmers boosted planting and yields rose because of higher fertilizer use, according to interviews with 631 farmers across six states by SGS SA for Bloomberg. “Even if production this year is more than the estimate, imports will still happen as we need to build stocks,” Ravi Gupta, chief executive officer of AWB India Pvt., said in an interview Nov. 19. “Our closing stockpile is really low.” The farm ministry and the Indian Sugar Mills Association have estimated sugar output at 16 million tons. The SGS figure for the previous year was 16.1 million tons, which compares with 14.7 million tons estimated by the government and the mills. To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net

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