April 6, 2004

 

 

India Corn Farmers Cash In On High Prices

 

India is likely to ship more than half a million ton of corn by June to cash in on high global prices and a good domestic crop, traders said on Tuesday.

 

"We have already done close to 350,000 tons of corn exports since December, and another 200,000 to 300,000 tons should go in the next three months," said Ahmedabad-based exporter Gagan Gulati.

 

"It is a freak year for us," said an official with an international trading firm. Exports are expected to taper off after June when South American supplies pick up and Indian supplies dry up, he said.

 

It is the first time in recent years that India has turned to corn exports following a firming of international prices and a lack of sales from China, which has fed the Southeast Asian market until now.

 

The Asian feed market has been scouting for alternatives as export offers of Chinese corn dwindled due to a drop in local stocks.

 

Some Asian feed millers are snapping up cargo that can be used as an alternative ingredient to corn, whose global prices have hit 6-1/2-year highs.

 

But corn still remains the preferred ingredient in Asia as it has a higher protein content compared with other feeds like tapioca.

 

Many buyers are looking at India because its corn is much cheaper than US corn. Sky-high freight rates make it even more expensive.

 

Gulati said freight rates from the United States to Southeast Asia were touching $100 a ton, making Indian corn purchases economical.

 

"The US is offering corn at $207-208 per ton at destination in Southeast Asia while Indian corn is available at $190 a ton," he said.

 

Traders said several international trading houses had bought Indian corn earlier and were now selling them to Asian nations.

 

South Korea has been one of India's major buyers. Malaysia, Southeast Asia's biggest corn importer, Vietnam, Indonesia and Sri Lanka have also bought cargoes from India.

 

Traders said India has not been a traditional exporter of corn as local prices used to be higher than global prices.

 

The country annually produces about 1.4 million ton of corn, mainly in southern and western India. It consumes about one million ton of corn to meet the demands of the poultry sector.