October 20, 2014
 

Corn glut in India as high prices turn away importers

Higher corn prices than those of rival suppliers US, Brazil and Argentina have caused India's lustre as an exporting country. Traditional importers have shied away and caused India's corn exports to decline by almost 50% in the year to September.

Traders said India's total corn exports reached only 2.5 million tonnes in 2013/14 from 4.7 million tonnes a year ago. Amit Sachdev, India representative of the US Grains Council, was quoted by the wire agency Reuters as saying that the same trend may "last for about a few months unless the price dynamics change."

India's corn is US$20 more expensive than the American corn whose delivered price is US$200-US$210 per tonne, and India's traditional customers in Southeast Asia including Vietnam, Malaysia, Thailand and the Philippines have been turned off.

Reuters reported that benchmark Chicago corn futures plunged 16% this year amid the global supply glut and currently trades at US$139 per tonne, almost 35% less than the price India has promised to pay its farmers if local rates for the grain drop below a support price fixed by the farm ministry.

"Why will a farmer in India sell at a lower price when he has been promised 131,000 rupees (US$213) a tonne?" Sachdev was quoted as saying.

India's annual corn output has more than doubled to 24 million tonnes since early 2000s. Weak exports have led to huge stocks of corn in the country.

Sachdev said that India should be having the geographical advantage of being near to Southeast Asia's corn-exporting countries but that "without lowering its price, the country will keep losing markets."