September 9, 2010

Indian corn exports set to rebound on Asia's demand

Exports of corn from India are set to rebound during the current year on account of high demand especially from Asian countries, including Indonesia, the Philippines and China.

However, the price at which corn will be offered will be critical.

At present, corn is quoted at INR12,000 a tonne (US$257) in Chennai, while the price quote for US corn for delivery in December is US$167.80 a tonne. However, freight charges will determine the extent of the advantage for the Indian corn over its counterparts. Meanwhile, on Tuesday (Sep 7), the recent surge in demand for shipping grains increased the Baltic index, a benchmark for freight rates, to a three-month high.

It is worth noting that the country exported 55 lakh tonnes of corn during 2007-08, despite the imposition of a ban mid-way due to domestic price surge. However, exports declined to under 35 lakh tonnes in 2008-09 and further to under 20 lakh tonnes in 2009-10. Similarly, the production of corn touched a record 19.67 million tonnes in 2008-09 before dropping to 16.64 million tonnes last in 2009-10.

The export demand for Indian corn will rise as drought has affected wheat and barley production in Russia, while corn crop in China has been severely affected by floods.