November 19, 2008


India's corn exports to fall on competition from Brazil

India's corn exports are forecast to plunge to 200,000 tonnes in 2008/09 from 3 million tonnes as buyers turn their attention to Brazilian corn.


India's previous self-imposed exile from the corn export market has forced buyers to look elsewhere, and Brazil's corn is looking attractive due to the weakening Brazilian real.


Amit Takkar, assistant vice-president of Adani Enterprise said all Asian buyers, except China and Thailand, which were purchasing corn from them have now turned to Brazil, Argentina and the US due to falling freight.


India's advantage for the first nine months of 2008 was lower freight rates when compared to imports from the US and South America. However, current cheaper transport had reduced India's cost advantage.


Lower exports, falling prices and slowing domestic demand will hurt corn farmers unless government agencies bought large quantities of the grain, Takkar said.


Takkar said buyers will not purchase Indian corn that cost above US$200 per tonne when they can acquire the grain elsewhere for US$190-195 per tonne.


India banned corn exports in July to October 15 to ensure sufficient supplies and to control inflation, but the move has damaged India's reputation as a long term supplier, according to Takkar and traders in the southern city of Nizamabad.


Analysts said the government is paying corn farmers 33-percent more for this season's corn, pushing up spot prices and making purchases by poultry firms unviable.


Takkar said the industry is unable to absorb the higher cost and the market could become bearish.


Traders said poultry firms that used to pay immediately now take 75 days to clear their dues, reflecting poor demand for their products.

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