The Hindu Business Line : Maize futures expected to trade higher

Supporting factors
The quality of rabi crop is not suited for export and the entire export demand has to be met by the kharif produce.
Lack of carry forward stocks may support prices on the higher side.

Suresh P. Iyengar

Mumbai, Feb. 24 Despite estimates of higher rabi production, maize futures on NCDEX are expected to trade on the higher side in the near-to-medium term on strong demand from Australia, Sri Lanka, the Philippines and Nepal.

Till February, India exported 5-lakh tonnes compared with 4.5-lakh tonnes shipped during the same period of the previous year. Global corn production estimates are around 766.23 million tonnes (mt) compared with 704.1 mt last year.

Export demand

According to USDA Report released recently, India’s production in 2007-08 is projected at 16.3 mt against 14.98 mt last year, up 8.81 per cent. Rabi crop from Northern States and a small quantity from Andhra Pradesh are expected to arrive next fortnight. “The quality of rabi crop is not suited for export. The entire export demand has to be met by the kharif produce,” said Mr Harish Galipalli, Karvy Commodities.

Further, lack of carry forward stocks may support prices on the higher side. The country is expected to produce 16.3 mt. Domestic consumption is pegged at 15.4 mt and exports at 5-lakh tonnes.

Future Trend

Maize futures on NCDEX rallied by Rs 140 per quintal in January despite higher output this year. Most active April contracts moved up from a low of Rs 790 per quintal in January to Rs 928. Strong export enquiries and declining kharif arrivals supported the prices. However, the bull run halted and fell to a low of Rs 805 by mid-February after outbreak of bird flu in West Bengal.

“Outbreak of bird flu in West Bengal and Bangladesh suppressed the prices. Wholesale prices of broilers and eggs plunged by 20-25 per cent across the country resulting in a slowdown in demand for poultry feed sector,” Mr Galipalli said.

However, the bearish trend is set to reverse in the coming days. The April contract is retracing back after witnessing a decline to Rs 791 levels. Prices have risen from Rs 808 per quintal to Rs 843 in the last one week. “We recommend going long at Rs 830-835 levels for possible target of Rs 870 and then Rs 885-900 with stop loss below 800 levels,” he said.

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