June 16, 2008

 

India 08-09 area under corn crop likely up 7 percent-10 percent

   
  

India's corn acreage for the current season is likely to rise 7 percent-10 percent from the previous year, as high prices have boosted farmers' interest in planting the crop, a senior industry official said.

 

"The high prices prevalent in the market will encourage farmers to grow more of the crop, especially in Karnataka, Maharashtra and some parts of Andhra Pradesh," Amol Sheth, president of the corn users group All India Starch Manufacturers Association told Dow Jones Newswires.

 

Corn is currently trading in domestic markets at INR8,500 (US$198) per tonne, up 18 percent from INR7,200/tonne during the same period a year ago.

 

Prices have surged in the domestic market despite healthy domestic production this year due to strength in international markets. High exports and record corn prices in US markets are expected keep prices firm.

 

"Local prices will continue to remain firm in the near term and are unlikely to fall below current levels," Sheth said.

 

In India, corn is cultivated in both summer and winter. Most of it is grown in the western state of Maharashtra and the southern province of Andhra Pradesh.

 

For the crop year ending June 30, Sheth estimates that corn production will be 16.5-17.0 million tonnes, although the federal government pegs it at 18.5 million tonnes. During 2006-07, the country produced 15.10 million tonnes of corn.

 

Exports in 2007-08 likely to rise substantially
 

High prices in the international markets and a freight-cost advantage are expected to boost Indian corn exports substantially during the current marketing year ending September, said Sheth.

 

Sheth said it is very likely that corn exports might reach 3 million tonnes.

 

This is sharply higher than the 400,000 tonnes exported the previous year.

 

India exports corn mainly to Malaysia, the Middle East, Vietnam and South Korea.

 

"Due to rallying crude oil prices, transportation costs have gone up, making it cheaper to import from India rather than from the US," Sheth said. "There is talk that even Pakistan has started importing corn from India because of a reduced crop in the country."

 

High exports could lead to domestic shortfall
 

However, if exports continue at the current pace, India could suffer a shortfall in domestic availability, he said.

 

"There is a good possibility of scarcity in stocks due to higher exports. Hence, the government should regulate exports by imposing quotas depending on local availability, he said.

 

In 2007-08, the country is expected to consume around 15 million tonnes of corn, a close shave considering production in 2006-07, was at 15.10 million tonnes.

 

In India, 60 percent of corn production is used by the poultry and livestock industry, while 12 percent is consumed by the starch manufacturing industry and the remainder is used for human consumption.

 

Sheth projects that demand from starch manufacturers would grow 10 percent this year, due to rising demand for starch-based products.