December 15, 2004

 

 

India Hoping to Win Corn Markets in Southeast Asia

 

India hopes to sell corn to Southeast Asia after reaching export deals to neighbouring nations. This is due to the possibility of a bumper harvest at home pushing down domestic prices, according to a grains-trading official on Wednesday.

 

Moreover India has a freight advantage over China and the United States to key Southeast Asian markets. This might help to make offers from the South Asian supplier more attractive, said P.S. Nathan, chief executive of Apoorva Agencies.

 

"I expect our prices to come down by the end of this year," revealed Madras-based Nathan. "The crop is very good. We could surely provide some competition to China and others in countries such as Malaysia and Indonesia."

 

India has just harvested a corn crop close to 16 million tons, about 33 percent higher than last year's 12 million. Traders say India would be able to offer about 3 million tons for export, after meeting domestic demand.

 

Nathan said India had struck a deal to export 12,000 tons of corn from its new crop to Sri Lanka and more deals were possible if prices eased. The deal was sealed at $158 a ton, including cost and freight, for January shipment.

 

"We will ship the amount to Sri Lanka in small lots," he said. "But for more sales to materialise, prices have to come down by about eight to nine percent."

 

India has also sold small cargoes from the new corn crop to Bangladesh.

 

SUPPLIES SEEN RISING

 

Taking advantage of firm prices and production shrinkages in the world's leading corn producers, India exported around 750,000 tons of corn to countries in Southeast Asia and the Middle East in 2003/04 (April-March) for the first time in many years.

 

Nathan said Indian corn prices were holding firm since traders were holding on to huge stocks. In addition, demand from the domestic poultry industry was also buoyant.

 

"But they can't go on holding on to huge volumes for a long time. They have to sell after studying the market. That should put some pressure on domestic prices," he added.

 

Last year, Indian corn prices rose sharply after demand from overseas shot up, putting local poultry feed mills in a difficult position. To avoid a repeat, Nathan said many feed mills had bought huge volumes to maintain higher stocks.

 

Nathan said plenty of containers were available in southern India, and freight brokers were quoting a rate of about $9 a ton for shipping the grain in containers to Malaysia. The freight rate from China to Malaysia was quoted at more than $20 a ton.

 

"We certainly have this advantage and we would also be able to meet the demand from somebody who is looking to buy even very small cargoes," Nathan said.

 

Global corn prices are under pressure on rising supplies. The United States is expecting a record crop of about 11.74 billion bushels. And China's new corn crop is estimated at 121-131 million tons, up from 115 million tons last year.

 

With freight rates remaining firm, US corn would work out to more than $160 to Asia in a panamax-sized vessel for December, compared with around $151-$153 from China.