June 18, 2011

 

Southeast Asia's buyers turn from India to Pakistan for corn

 

 

Southeast Asian buyers that usually purchase Indian corn are turning to Pakistan, due to lower price offers from Karachi, according to trading executives.

 

Pakistan's corn exports are relatively small, but the sales are significant as corn from Pakistan is currently around 10% cheaper than from the US, and is helping meet immediate demand from buyers in Asia amid a surge in global prices.

 

India's corn sales have slowed considerably as Pakistani corn is now US$7-US$8 a tonne cheaper than the grain from Andhra Pradesh state, a major corn exporter, a Mumbai-based trading executive said late Thursday (Jun 16). Pakistani corn is also around US$35/tonne-US$40/tonne cheaper than US origin.

 

Pakistan has sold 32,000 tonnes of corn in the last few weeks for shipment in containers to buyers in Indonesia, Malaysia and the United Arab Emirates, said Muhammed Najib Balagamwalla, Chairman of Karachi-based commodities trading company SeaTrade Group. He said 10,000 tonnes has already been shipped out.

 

The sales were made around US$300/tonne, free on board, he said.

 

Najib said talks are also on with buyers in Vietnam for corn sales in containers.

 

Vietnam was a major buyer of Indian corn earlier this year, but its purchases fell after customs authorities in Ho Chi Minh City rejected a few cargoes, saying they contained pests.

 

Indonesia later emerged as the largest buyer of Indian corn, buying more than 400,000 tonnes in February and March. Its demand has weakened after the heavy purchases from India, and it is meeting its small remaining requirements with corn from Pakistan and elsewhere.

 

"Indonesia is now well covered to meet its immediate needs, and its demand has slowed," the trader in Mumbai said.

 

He said Indonesia has taken delivery of a cargo of 55,000 tonnes of South American corn from Marubeni Corp.'s commodities trading division, and close to half of this is yet to be sold to consumers.

 

Since Pakistan's available volumes are limited, buying interest for Indian corn may revive later, traders said.

 

Pakistan has also made significant inroads into the wheat markets in Southeast Asia, Africa and the Middle East, even as India has kept a ban on wheat exports in place for the last three years.

 

Pakistan's wheat exports have reached two million tonnes so far this year, including 1.7 million tonnes in bulk, and shipments may reach three million by early August, SeaTrade's Najib said.

 

Pakistan is offering wheat around US$305/tonne-US$309/tonne, FOB, while Australian Standard White grade was quoted earlier around US$340/tonne earlier this week.