September 8, 2010

Black Sea drought boosts India's corn

Southeast Asian buyers facing a shortfall in feed wheat are locking in purchases of Indian corn even before the harvest has begun, trading executives said Tuesday (Sept 7).

India has already made its first export sales of new crop corn to buyers in Southeast Asia for shipment in November and December.

As Ukraine and Russia have stopped supplying feed wheat, importers are looking for wheat shipments from central Europe and substituting part of their animal feed requirements with corn.

Traders said more than 20,000 tonnes of corn from the upcoming Indian harvest has been sold to Indonesia, Vietnam and Malaysia at US$233-US$247/tonne, basis cost and freight. India's corn harvest will start next month.

"There is strong buying interest for Indian corn as it is much cheaper than South American corn and the delivery time is less," said one of the traders involved in such deals.

He said more deals are being negotiated and sales will rise further in the next few days.

India is offering bulk cargoes to Malaysia and Vietnam at US$260-US$262/tonne. Indian corn in container shipments has been sold at US$235-US$236/tonne to Malaysia, US$233-US$234/tonne to Indonesia and US$238-US$247/tonne to Vietnam.

More than 7.1 million hectares of area has been planted with corn this year compared with a normal acreage of around 6.86 million hectares. Adequate rains in major corn growing regions of states such as Karnataka, Andhra Pradesh and Bihar will likely push up output.

India's corn production was affected by drought last year. The area under corn was 6.88 million hectares last year and 6.66 million hectares in 2008.

Exporters expect the first shipments of corn to take place from the early harvest in Karnataka.

India's corn exports had been badly hit after the April harvest when local prices rose above rates at which traders had transacted deals with overseas buyers and several contracts had to be cancelled.