Corn output in the crop year ending May 2009 fell three million tonnes to 16.32 million tonnes, according to government estimates, but a slump in exports because of high prices and quality issues, has resulted in adequate stocks, analysts and traders said. They also said that poor exports have weighed on prices significantly.

 

"At this stage farmers will be cautious… they will cultivate in the same area as last year," said Madhukar Modi, a trader at Davangere, Karnataka, a major trading centre. "Progress of monsoon will be the deciding factor,'' he said.

 

Corn is a preferred crop during a weak monsoon as it survives scarce water supply better than other competing crops, analysts said.

 

The fall in output is outweighed by a fall in exports which has made stock situations comfortable. India consumes over 17 million tonnes of the grain in a year, while the excess is exported. "There is no excess stock but we have good stock... enough for the local demand,'' said Poonam Chand Gupta, a large trader of the commodity in Nizamabad, a trading hub in Andhra Pradesh.

 

Exports in the year to September may drop as much as 60% because of rejection of stocks due to inadequate quality. "Poor exports have brought prices to the minimum support level of INR840/per 100 kg (US $18.18), said an official with a grains council. ''This means globally we may become competitive again in the next season,'' he said, and this may be an incentive for farmers to increase sowing.

 

Gupta also said, "Indian corn by now has already become viable for exports but quality issues are still weighing."

 

However, some farmers may be expecting a revival in exports and some of India's major growing states are expecting a moderate rise in acreage. Andhra Pradesh, the major producer of the crop may see a 15% increase in acreage, said Mangaiah, an assistant director at the state farm department. Corn may also gain area in Madhya Pradesh, another major producer.