February 25, 2011

 

Indian corn exports to recover in 2011-12

 

 

Despite recent worries over the quality of corn, India's corn exports are expected to recover in the next fiscal year starting April 1, due to an abundant harvest which improved stock levels in spite of strong global demand, according to government and trade officials.

 

Vietnam recently insisted on a more severe fumigation of several thousand tonnes of Indian corn due to suspicion of the presence of pests. This brings about fears that the key buyer may decrease imports just when India is expecting a bumper harvest.

 

However, Indian government and trade officials said exports are not likely to be affected as occasional trade hiccups are not uncommon to India, and demand from Vietnam is still strong. They also added that it is too early to give an exact forecast of total corn exports for 2011-12.

 

The country's corn exports for this fiscal year are expected to decline 5% to 2.5 million tonnes because of a crippling drought that decreased the harvest by 15% in the crop year through June 2010 which led to low stock levels.

 

India, the world's fifth-largest corn supplier, exports the animal feed primarily to Vietnam, Bangladesh and Malaysia.

 

The country expects a record output of 20.03 million tonnes in the 2010-11 crop year, up from 16.72 million tonnes in the previous year due to higher plantings and plentiful rains.

 

The monsoon rains take place in May-June so approximately 70% of India's corn is grown in summer while the rest are produced in winter.

 

Traders usually ship from stocks after the winter crop's harvest in June until the fresh summer crop starts to reach the market in October-November.

 

India stands to gain from corn exports as global stockpiles are at multi-year lows and futures prices of the animal feed have more than doubled since June 2010 because of a smaller-than-expected crop in the US, the world's largest exporter.

Corn futures for May delivery jumped US$0.12, or 1.7%, to US$7.25/bushel on Wednesday at CBOT as supply concern weighs.

 

The traders said a higher local production will ensure the competitiveness of Indian supplies.

 

The landed cost of Indian corn in Vietnam is currently around US$295/tonne, while Asian rival Thai corn costs around US$320/tonne, one of the traders said.

 

"India's corn export prospects look bright next fiscal (year) because crop in major exporter Argentina has been hit by bad weather," another trader added.