June 7, 2007
Low arrivals, high poultry demand push up India's corn prices
Indian corn prices in both spot and futures markets are increasing due to dwindling arrivals at the end of the summer harvest as well as rising demand from the poultry sector, traders and analysts said.
India has three corn crops-monsoon, winter and summer but majority of the harvests come from the monsoon crop, which runs from June to September.
Veeresh Hiramath, an analyst with Karvy Comtrade, said demand for eggs and chicken increases in the monsoon season which crops up requirements for corn for poultry feed.
On Wednesday (June 5), the June contract on the National Commodity and Derivatives Exchange rose by 0.6 percent to 755.5 rupees per 100 kilograms, while the July contract rose by 0.6 percent to 768 rupees. Both contracts have risen 3 percent in just two sessions.
In Sangli, a major spot market in western state of Maharashtra, corn prices rose by 20 rupees to 760 rupees per 100 kg in two days.
Mohanbhai Vedant of Nizamabad Corn Products Pvt. Ltd said arrivals have already decreased and may stop within the next few weeks.
Analysts said the July contract would touch the 850 rupees level before expiry on July 20.
Jeevanlal Kataria, a trader from Nizamabad said the rise will not affect poultry feed and starch manufacturers as they have allegedly hoarded enough stock to meet the demand.
The government expects corn output in the year to September 2007 to touch 13.85 million tonnes, a 6 percent drop from last year's 14.71 million tonnes.
But, traders forecast even a lower figure at 12 million tonnes. India's annual demand is pegged at 14 million tonnes.
In major spot markets, corn prices are ranging from 690-760 rupees per 100 kg, from about 570 rupees a year ago.
To overcome a shortage that had triggered domestic prices, the government in January allowed duty-free imports of corn until the end of 2007. Corn earlier attracted an import duty of 60 percent.
(US$1 = 40.425 Indian rupee)
