July 4, 2008
India bans corn exports
India's federal government Thursday (July 3, 2008) banned corn exports with immediate effect in a bid to tame rising inflation.
The ban will be in effect until October 15, a statement from the ministry of commerce and industry said.
Corn prices have risen sharply in the local markets due to an unprecedented rise in exports from the country, adding to inflationary woes. International demand for Indian corn has been rising since the surge in CBOT corn prices. China's closing off corn exports earlier in the year further fueled demand. This meant two of Asia's biggest corn suppliers have closed off exports.
India itself is facing a 13-year high inflation of above 11 percent due to rising food prices.
The corn consumption industries, especially the poultry industry, has long called for restrictions on Indian corn export but the government has gone a step further.
Indian corn is currently at Rs 8300 (US$191.8 )per tonne but some corn futures contracts have already hit Rs 9730 (US$224.8 ) a tonne on the NCDEX, India's commodities exchange.
Export prices to Southeast Asian countries were about US$300 a tonne compared to US$430 for corn from Argentina. South-east Asian countries such as Indonesia and the
Philippines have been snapping up Indian corn due to the lower prices offered.
Without the ban, exports would have reached 2.5 million tonnes in the year to September, up five-fold from the year before, trade officials said.
Despite a good crop, prices have been rising rapidly in India.
The government in April forecast domestic corn output at 18.54 million tonnes in the crop year to June 2008, a 3.4 million-tonne increase from a year ago.
