September 12, 2007

 

Industry body bullish on India's corn sector

 

 

India's corn exports in the crop year starting October are expected to increase by 500,000 tonnes to 1 million tonnes due to a rise in production and favourable overseas prices, a senior industry official said Tuesday (September 11).

 

"India should produce around 14 million tonnes of corn during the summer planting season, up 3 million tonnes on year," said Amol Seth, president of the All India Starch Manufacturers, an association representing key corn consumers in the country.

 

India had produced around 13.5 million to 14 million tonnes of corn in 2006-07, of which 11 million tonnes were produced during the summer planting season and the remainder during the winter planting season.

 

In India, summer crops are sown in June-July, and the harvest starts from October, while winter crops are sown in November-December.

 

Seth, who is also managing director of Anil Products Ltd., a starch manufacturing company, said corn prices are likely to weaken in the next few weeks as the new crop will increase market supply around October.

 

Corn prices in India have eased to around INR6,700/tonne (US$165.53) after hitting a record high of INR9,000/tonne (US$222.35) early this year on a supply shortage.

 

Average corn prices for 2007-08 should range at INR7,000 to INR8,000/tonne due to favourable production conditions, Seth said.

 

He said lower corn prices could force farmers to switch to other crops in subsequent months, reducing India's winter-sown corn acreage.

 

"If prices soften more than expected, we could see winter corn production dropping to 1.5 million to 2.0 million tonnes, against 2.5 million to 3.0 million tonnes a year earlier," he added.

 

Last year, India's federal government allowed duty-free imports of corn until 2007 to check price hikes.

 

"Our view is that the government should extend the duty-free import scheme even after 2007, as it gives an option to the industry to meet any probable shortage," Seth said.

 

Previously, India imposed a hefty duty of 60 percent on corn imports.

 

US$1 = 40.475 Indian rupee