August 25, 2009

India may ban corn exports for the second season in a bid to boost local supplies as the crop wilts under the driest monsoon in seven years, said the US Grains Council (USGC).

A ban was a real possibility if prices further increased, said Amit Sachdev, India representative of the USGC.

A halt in corn shipments from the South Asian country may boost sales for the US and Latin American suppliers and may support which fell 45 percent in the past year.

A drought in 40 percent of India's 626 districts may lower output in the world's second-biggest producer of rice, sugar and wheat.

The crop had been hit by lack of rains and it was bound to affect productivity, but, how much the output would decline remains unknown, Sachdev said.

India sells corn mostly to animal feed makers in Malaysia, Indonesia, Vietnam and Thailand. Shipments have totalled one million tonnes since the four-month ban on exports was lifted on Oct 15.

Overseas sales were banned in July last year after prices surged. The ban ended after output reached a record 19.3 million tonnes, including a summer crop of 13.9 million tonnes.

India is now cautious about the overall supplies and has banned corn exports, said Vijay Iyengar, managing director at Agrocorp International Pte. from Singapore.

India has purchased a record 30 million tonnes of rice and 25.1 million tonnes of wheat from farmers this year.

Farmers planted corn to 6.75 million hectares as of Aug 12 compared with 6.59 million hectares a year earlier, according to the farm ministry.

Corn prices have jumped 20 percent on the National Commodity & Derivatives Exchange Ltd. in Mumbai in the past six months on speculation of below average rains that will reduce production.