October 18, 2011

Indian poultry industry to augment corn prices

As Indian poultry industry consuming 50% of the domestic corn production is projected to rise at an annual rate of 20%, corn futures are seen to soar at the National Commodity and Derivatives Exchange of India (NCDEX), according to Associated Chamber of Commerce and Industry (ASSOCHAM).

Presently all corn contracts at NCDEX are trading up on increased poultry sector demand for the commodity. Last week the most actively traded November Corn contract rose 4.50% on week to INR1090.50 (US$22.21) on Saturday. Meanwhile on CBOT the corn futures ended on higher note as of Friday on having strong foreign demand and also the traders' expectation over China who may continue to buy the commodity. An ASSOCHAM study Trends In Domestic Poultry Segment pointed out that the industry will grow 20% annually and is expected to cross 1.32 lakh crore by 2015 which in turn raising the demand for poultry feed mainly corn.

The study highlights that the domestic demand for broiler meat and eggs has risen and currently the poultry market is estimated at about INR49,000 crore (US$10 billion). Corn accounts for the over half of total production cost of poultry feed and the poultry sector consumes over 50% of total corn production in the country. India produces around three million tonnes of broiler meat and about 2.86 million tonnes of eggs annually and South India accounts for the majority of the total poultry production.

According to D.S. Rawat secretary general ASSOCHAM the upswing in the poultry industry in India is due to the changing food habits rising purchasing power and contract framing and urbanisation. Significant breakthrough in poultry science and technology together with breeding of genetically superior birds capable of high production manufacturing of high tech poultry equipments are key reasons for growth in egg meat production.

According to the study there are excess of opportunities for foreign direct investment (FDI) in the poultry sector in areas like breeding medication feedstock vertical integration and processing but lack of infrastructure like power and transportation are major turn off in this aspect. But sporadic bird flu outbreaks in different parts of the country along with lack of storage and processing facilities and rising prices of feed stocks including soymeal and corn have severely hit the poultry exports said Mr Rawat. India is the third largest egg producer and fourth largest broiler meat producer in the world. Nearly two crore farmers (including agrarian farmers) are employed in poultry industry. Currently there are about 1,000 hatcheries operating across India. In NCDEX Corn November contract traded up 1.74% or INR19 (US$0.39) to touch INR1109 (US$22.57) and October contract traded up 1.55% or INR15.50 (US$0.32) to reach 1002 in the afternoon trade on Monday.