March 2, 2012
After Vietnam rejected some cargoes because of pests and the rebounding rupee boosted prices, India may ship less grain than predicted this year, according to a traders' group.
"Sales in the year that began on October 1 will trail the three million tonne estimated in November," said India Pulses & Grains Association, President Pravin Dongre. The country exported 2.5 million tonne in 2010-2011, he said.
Futures lost 11% in the past year in Chicago as record global corn production cut demand for the livestock-feed ingredient from the US, the largest producer and exporter. Vietnam may boost imports from South America and Ukraine after turning back a couple of Indian cargoes, citing the presence of live khapra beetles, an insect that destroys grain, Dongre said.
"Earlier if there were 10 buyers, then 10 shippers were willing to export to Vietnam," said Dongre. "With this issue, shippers are very hesitant."
Vietnam is the third-largest buyer of Indian corn after Indonesia and Malaysia, he said. The country may halt imports if India persists in sending infected cargoes, said Nguyen Xuan Hong, head of the plant protection department at the Ministry of Agriculture and Rural Development. "We didn't let some cargoes with khapra beetles go through recently," he said. "If India continues to violate, not carefully disinfecting before exporting to our country, we'll propose banning imports," he said. More than half of the country's imports come from India, he said. A rebound in the Indian currency from a record low against the dollar in December has increased export prices, making supplies from Argentina and Ukraine cheaper, said Dongre.
Futures on the National Commodity & Derivatives Exchange in Mumbai rose 15% since October 1, beating the 11% gain in Chicago. The rupee, which fell to a record 54.305 to the dollar on December 15, rallied 7.8% this year.
"The rupee was appreciating in a big way so we were becoming uncompetitive," said Dongre. "Buyers prefer Argentine corn to Indian corn, unless and until there is a huge disparity in price. Ukraine is also feeding the market."
Corn for May-delivery dropped 0.2% to US$6.5625 a bushel in Chicago in Singapore, while the contract for March-delivery was little unchanged at INR1,154 (US$24) per 100 kilogrammes in Mumbai.
World corn production will total a record 863.8 million tonne in 2011-2012, the International Grains Council said February 23. The US harvest may jump 15% to an all-time high 14.27 billion bushels as surging profits spur farmers to plant the most acres since World War II, the government said on February 24.
Ukraine's exports may jump 20% to 15 million tonne in 2012-2013 because of a bumper harvest, Andrew Druzyaka, advisor at the State Food & Grain Corporation of Ukraine, said on February 23.
"India probably shipped 1.1-1.2 million of corn since October 1," said Dongre. The country may produce 21.6 million tonne in 2011-12, compared with 21.7 million tonne a year earlier, according to the farm ministry.