August 29, 2008
Although India's ban on corn exports is unlikely to extend past the mid-October deadline, traders are saying the government should release exports earlier before large harvests drag prices down on the international market.
Although rice and wheat exports, both of which were also banned, are unlikely to be released, India, with a bumper corn harvest expected, should release it for exports to take advantage of current high prices, traders said.
If the ban drags on, Indian suppliers could lose business in the Southeast Asian markets they had build up over the past year.
Indian corn was not popular in Southeast Asia until the surge in US corn prices and the banning of corn exports by China drove many of the region's buyers to buy Indian corn.
Atul Chaturvedi, head of the agricultural arm of Adani Enterprises Ltd, a commodities player in India, said Indian farmers should have the opportunity of getting better prices in the export market.
Even though India's corn exports make up just 3 percent of global trade of over 100 million tonnes, it has become an important supplier to countries such as Malaysia, Vietnam and Indonesia.
India's government banned corn exports on July 3 after the poultry industry and food industry called for a export restrictions to ease prices.
As US prices have lost around quarter of its value since hitting an historic high of US$7.65 a bushel at the end of June, Indian corn prices have similarly fallen around 6 percent in past month to around 9,400 rupees ($215) per tonne, with Southeast Asian markets helping to support prices.
India's corn output from upcoming harvest that starts in September is estimated to be only marginally lower at 18.5 million tonnes, compared with last year's record 19.3 million tonnes, data from the International Grain Council (IGC) showed.
India is expected to export 3 million tonnes of corn this year, a more-than-seven-fold increase on last year, thanks to the Southeast Asian market.
A slowdown in domestic feed consumption, coupled with a near-record harvest, is likely leave India with a surplus of at least 3 million tonnes in the coming year.