December 17, 2003

 

 

India Finds New Corn Markets in Southeast & West Asia

 

India has now identified alternative markets for its corn supply in the global market.

 

"At least, 1.25 lakh tons (lt) have been contracted for exports to South-East and West Asia," trade sources said. "But how much of this has been shipped or will be shipped, we are not sure."

 

This development comes in the light of a record 12.80 million tons (mt) production during the kharif season.

 

However exports are taking place in small lots to these destinations from Kandla, Visakhapatnam and Tuticorin ports.

 

Going by the domestic prices of Rs 5,500-6,000 a ton, corn for exports is reportedly being quoted around $130 a ton.

 

"Countries that have come forward to buy Indian corn are South Korea, Sri Lanka, Bangladesh besides countries in the Gulf," the sources said.

 

When contacted, the Indian Maize Development Association Secretary, Mr S.L. Chopra said that a fall in the Chinese crop had forced the South-East Asian nations to look here. "Even our rabi corn crop could be in demand," he said.

 

Corn is mainly used as animal feed world over, especially for poultry. The US and China are the top two exporters of corn. Chinese crop this year is seen down by at least four mt on damage due to rains, while rising freight rates are making purchases from the US a costly proposition. Chinese corn production is seen a little less than 114 mt, while the US output is seen at 261 mt.

 

Production fall in countries such as Argentina and Brazil is also seen as a factor putting pressure on corn prices in the global market.

 

Currently, Chinese corn is quoted around $154-156 free-on-board (f.o.b) a ton. Yellow corn from the US is quoted at $117 and white corn at $128 f.o.b for delivery in January.

 

"Our prices are extremely competitive. Also, the proximity to the countries that are looking for corn is helping us," Mr Chopra said.

 

But he said corn prices in the domestic market, which have begun rising during the last couple of weeks, should stabilise at these levels.

 

Currently, crop from Madhya Pradesh, Maharashtra, Rajasthan and Gujarat are arriving in the markets. "Only 5% of the crop has arrived in Maharashtra," Mr Chopra said.

 

Trade sources alleged that only 35% of the estimated production had arrived in the market so far. "That raises a few questions. And is the price rise really helping the farmers?" they asked.

 

Considering that the Government estimate of the corn production proves right, at least 1.7 lt of corn would be available for export, industry experts say.

 

"The quality of our corn, barring Uttar Pradesh, where there has been some damage, is good," a producer-source said.

 

Experts say it could be the first time that Indian corn was finding buyers abroad.

 

"Bangladesh does buy our corn, but that has never been recorded," they say. The country has so far been a net importer with the Government bringing corn imports under a tariff regime. Under this, only five lt can be imported at a 15% concessional customs duty. Any shipment above this quantity will attract a higher duty of 50 per cent.

 

As regards corn consumption, offtake by the poultry sector is expected to be 6.64 mt, the livestock sector 1.39 mt, starch industry 1.10 mt, brewery 60,000 tons.

 

With wheat prices ruling over $170 a ton, corn could see increased demand from South Korea, Japan and Indonesia, experts say.