September 23, 2004

 

 

Low Global Prices To Slow Indian Corn Exports

 

India is unlikely to export any significant quantity of corn this year despite a bumper crop. This is due to depressed global prices and plentiful supply of feed grain, a leading exporter said on Wednesday.

 

"The world is awash with corn this year and prices are low. Thus, exports from India can happen only if prices improve," Atul Chaturvedi, president of agri-business at Adani Exports Ltd. 

 

India exported around 750,000 tons of corn in 2003/04 (April-March), taking advantage of firm prices and production shrinkages in the world's leading corn producers.

 

India normally imports a few hundred thousand tons of corn a year for its starch and poultry feed units. But it exported the grain for the first time in several years in 2003/04 following a bumper crop of nearly 12 million tons.

 

India grows corn on about 6.5 million hectares annually in the southern states of Andhra Pradesh and Karnataka, northern Uttar Pradesh and eastern Bihar as well as central Madhya Pradesh.

 

The country is estimated to produce at least 14 million tons of corn this year, industry officials said, leaving at least 1 million tons which could potentially be exported.

 

"It was a fantastic year for India when we had a good crop and the world faced a scarcity. But this year the scenario is bleak (for Indian exports)," said Chaturvedi, whose firm shipped more than 300,000 tons of corn to countries in South East Asia and the Middle East last year.

 

Traditional corn buyers in Southeast Asia such as South Korea, Malaysia and Vietnam had the choice of buying feed wheat from places such as Russia, Ukraine and Europe at prices as low as $105 a ton on a free-on-board (FOB) basis, Chaturvedi said.

 

In comparison, Indian corn is quoted at around $134 a ton FOB, making it "too expensive" for prospective buyers, he said.

 

"We do get queries, but if we are to make any sales this year, Indian corn prices should fall by at least $15 a ton," he said.

 

Industry officials say corn exports from India in 2003/04 fetched as high as $155-160 a ton FOB.

 

Chaturvedi said expectations of a bumper U.S. corn crop were also hammering corn prices, with futures prices at the Chicago Board of Trade (CBOT) falling steadily.

 

U.S. farmers are expected to harvest nearly 11 billion bushels of corn this fall, smashing last year's record crop of 10.1 billion bushels.

 

Early harvest reports look strong, with talk of yields of 180 to 200 bushels per acre or more common, traders said.

 

Firm freight rates from India to Southeast Asia were also pushing up the cost of the grain, Chaturvedi said.

 

"We are not fully giving up. An opportunity could arise in future if prices rise in international market."