The Hindu Business Line : Exporters bearish on maize export prospects

Chennai, Nov. 10 Corn (maize) exporters are bearish on export prospects in the short-term but are expecting a pick-up from around December. On the other hand, with arrivals beginning to flood the markets, the prices have started crashing.

“Maize exports have ground to a halt owing to a slew of reasons. Fall in commodities prices due to credit squeeze is one reason, then the fall of the rupee against the dollar has meant that there is no parity,” said industry sources.

“We are currently buying stocks to build inventories. Some of the arrivals in the market have higher moisture content,” said Mr M. Rajesh, Managing Director, Rajathi Group of Companies.

High moisture content

Some of the maize arriving in the market have a moisture content higher than 14 per cent, according to trade sources.

“We are bearish on exports now. But we expect to export corn in a big way towards the year-end,” said Mr A. Rajkumar of Alagendran Group of Companies. “Around December, corn will be available in plenty with a record crop being projected during the current kharif market season,” he said.

However, the Agriculture Ministry in its first estimate of the kharif crops has projected corn production at 13.04 million tonnes (mt) against 15.15 mt last year.

Spot prices down

“Arrivals of corn have been delayed due to rains in September. In fact, during the same time last year the market was flooded with corn being early in October. This year, arrivals are just picking up, particularly in the South,” said Mr Rajkumar.

Spot prices for corn, which are ruled at Rs 1,000 a quintal during September-end, have declined to Rs 883 in Nizamabad. “During the weekend, prices were ruling at Rs 900 a quintal and there were no takers,” the sources said.

“The Centre may have to step in to procure maize as part of market intervention operations if prices fall below the minimum support price,” Mr Rajkumar said.

The minimum support price for corn was raised 35.5 per cent to Rs 840 a quintal. “As of now, there is no pressure but once arrivals in the South begin flooding the market, prices will drop further,” the sources said.

Buyers default

On the other hand, the credit squeeze impact on commodities has brought exports to a halt. “We have not got a second round of orders from any of our buyers,” said Mr Rajkumar.

Industry sources said there were some default by buyers but it was some 5,000 tonnes only. “Some buyers bought corn at $240-250 a tonne but they did not take delivery of the cargo,” the sources said.

Big players’ entry

Currently, corn is quoted at $205-210 a tonne f.o.b. Last year, during the same time, it was quoted at $240 a tonne and at one point of time exceeded $300.

“Despite the fall, we have not seen big players such as Cargill or Louis Dreyfus or Starcom coming into the market. The prices are expected to fall further to around $180 and it could see them enter the market,” the sources said.

Over 30 lakh tonnes of corn have been exported this year. In fact, the increasing exports led to rise in domestic prices and forced the Centre to ban exports in June till October 15. The ban has lapsed since then.

Despite the downturn, rabi sowing of corn is also expected to be higher as it is one of the remunerative crops, needing less water and maintenance. Last year, total corn production was estimated at 19.31 mt.

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