March 26, 2012

 

India signs corn export deal at 1.8 million tonnes

 

 

For the first five months of the current marketing year covering October-February, Indian traders have signed deals to export 1.7-1.8 million tonnes corn, industry executives said.

 

Of this amount, around 1.3 million tonnes corn has already been shipped out, a senior official with a trading house said.

 

Exports of the course grain are lower on-year, signalling weak demand, the official said. In the year ago period, export contracts for around 2.1 million tonnes had been signed, he said, adding that deals have been few and far between this year.

 

About 80% of India's corn export is typically headed to Asian countries like Indonesia, Vietnam, Malaysia and Korea.

 

Indian corn usually sells at a discount of US$10-15 a tonne to the Argentinean and US variety due to quality issues. However, higher local prices and an increase in freight charges have now made the Indian variety more expensive overseas.

 

The official said the US$25-30 a tonne rise in freight rates is making the commodity unattractive for international buyers.

 

Indian corn is currently fetching around US$270-275 a tonne, free-on-board, the official said. On the other hand, Black Sea origin corn is fetching US$260 a tonne, and Argentinean corn is selling for US$271 a tonne.

 

"Their (Black Sea, Argentina) freight charges are nominal and our high freight charges and quality issues make us uncompetitive," said an official with other trading house.

 

The pace of corn exports has been very slow this year also because domestic prices have firmed up, which has made the commodity uncompetitive overseas even as the demand is weakening, the official said.

 

Currently, corn is fetching close to INR12,400 (US$242) a tonne at the Kakinada Port, as against the average INR9,958 (US$194) in October. Overseas sales were brisk during November-January, when the rupee had been falling against the US dollar, giving exporters an advantage, the official said. The Indian unit had touched a record low of 54.29 per dollar on December 15.

 

India's corn export is seen around 2.5-2.7 million tonnes during October-September. Last season, India had exported about three million tonnes of the coarse cereal, another official with a multinational trading firm said.

 

A trade official said the country's rabi corn output this year is seen at 4.7-4.8 million tonnes, lower than government estimate of 5.5 million tonnes.

 

According to the farm ministry's latest estimates, India's corn output in 2011-12 (July-June) is seen at 21.60 million tonnes, compared with 21.73 million tonnes last year.