The Hindu Business Line : Maize prices harden on tightening supplies

In a nutshell
Spot price in Ratlam has shot up by 11% to Rs 800 a bag (50 kg).
On NCDEX, Dec contract rose 18.30% to Rs 808 between Oct 24 -Nov 23
Acreage under maize cultivation has fallen to 1.73 lakh hectares

Mumbai , Nov. 26

Maize (makki) could go the way of wheat. Maize prices have been moving up in the spot market over the last few months after the Government forecast lower than expected harvest.

The Government's fourth advance estimate for maize has pegged production at 12.41 million tonnes (mt) in the current year against the annual consumption of approximately 14 mt. The first estimate had placed maize output at 11.43 mt against the target of 12.54 mt.

Global outlook

The outlook for world maize production is not rosy either. According to international estimates, the world production is seen around 689 mt while the consumption could go up to 724 mt - a demand-supply mismatch of around 35 mt.

Given this scenario, maize prices on the spot market have started inching up. The spot price in Ratlam, one of the major maize markets, has shot up by 11 per cent to Rs 800 a bag (50 kg). Between October 24 and November 23, the December contract of maize on NCDEX has gained 18.30 per cent to Rs 808 from Rs 683.

India imports a major portion of maize for human consumption as the domestic output is of inferior quality. Of the total production, starch manufacturers consume around 20 per cent, while the remaining produce is consumed by humans and cattle. The Government allows imports of a fixed quantum (decided annually) of maize at a concessional duty rate of 15 per cent with that over the annual limits attracting 50 per cent duty.

Slipping acreage

The recent rise in wheat prices has encouraged many farmers to shift cultivation from maize. As on November 2006, acreage under maize cultivation has fallen to 1.73 lakh hectares from 2.23 lakh hectares last year.

Interestingly, the geography of maize has changed substantially in the last few years. Area under maize cultivation in Rajasthan has come down in the last two years while that in Jharkhand, Chhattisgarh, Bihar, Andhra Pradesh and Karnataka have gone up.

India is the seventh largest producer of maize in the world. Approximately 80-85 per cent of the maize crop is grown in the kharif season (June-October) mainly in Rajasthan (16 per cent), Madhya Pradesh (15 per cent), Andhra Pradesh (13 per cent), Uttar Pradesh (10 per cent), Karnataka (8.5 per cent), Gujarat (6.5 per cent), Himachal Pradesh (5.7 per cent) and Maharashtra (5 per cent).

Apart from India, other major maize producing countries include the US, China, European countries, Brazil, Mexico and Argentina.