The Hindu Business Line : Corn exports may run into rough weather

International prices
US corn is quoted at $227 f.o.b US Gulf and c&f prices are around $290-297 a tonne
Exported Indian corn is currently quoted at $224-5 f.o.b and the asking price is at $260 c&f

M.R. Subramani

Chennai, Feb. 19 Corn (maize) exports from the country, which have earned the ire of the user industry as prices increased, are likely to hit a trough as higher rates in the domestic markets make further shipments “unfeasible”. Adding to the exporters’ woes is the fall in freight rates from the US.

“The export market has turned dull during the last fortnight. Though plenty of corn is available, higher domestic prices are not presenting a viable option for its exports,” said a trade official, who did not wish to be identified.

According to Mr Amit Sachdev, the Indian representative of the US Grains’ Council, exports have slowed down in the last couple of weeks and only the contracted quantity of corn from the country may be shipped.

“You should also note the fact that, since October, freight charges from the US have declined by nearly 35 per cent. That cuts the spread between Indian and US corn,” Mr Sachdev said.

US corn is quoted at $227 f.o.b US Gulf and the c&f prices was around $290-297 a tonne.

In the case of Indian exports, corn is currently quoted at $224-5 f.o.b, according to the trade official. Indian corn has been enjoying a good patronage mainly in view of freight advantage to the South-East, Far-East and West Asian countries.

Since the crop year began in June, at least 10 lakh tonnes could have been contracted for exports. The average price of the export corn is around $240 a tonne f.o.b, according to Mr Atul Chaturvedi, President of Adani Enterprises.

“Indian corn has found takers in Korea, Taiwan, Malaysia, Thailand, West Asia and Vietnam,” he said.

“There should be no problem on the supply front as the rabi production is also expected to be good,” Mr Chaturvedi said.

The trade official said domestic prices have increased and currently the free-on-rail prices were Rs 8,000 a tonne.

“Buyers abroad are asking corn at $260 c&f and deliveries are taking place at $270. But the fact is that prices has become a major issue curbing exports,” Mr Sachdev said.

Logistics issue

The trade official said logistics problem in the form of access to the Kakinada port through railways was also hurting exports.

“The railway line closes for two days if it opens for a day. There is a real bottleneck that hurts exports,” the official said.

Corn exports are mainly taking place through Kakinada, Chennai, Tuticorin, Mumbai and Kandla ports. But Kakinada is the main port of exports, especially to South-East and Far-Eastern countries.

“Even in other ports, there is a bit of congestion,” the official said.

Meanwhile, in an interesting turn of events, Pakistan has decided to import corn from India. “The problem with Pakistan is that it is not buying aggressively,” said Mr Chaturvedi.

The trade official said exports to Pakistan would depend on the offer prices.

However, Mr Sachdev said logistically it would be difficult to export to Pakistan.

“Corn in North India is ruling at Rs 8,000 a tonne. Now, if you add the packing and transport costs, it would be not feasible for them,” Mr Sachdev said.

No imminent export bans

On the other hand, fears of ban on corn exports have been laid to rest with the Food Ministry saying there are no plans for such a move.

“We have no plans to ban corn exports. We don’t think there is any problem with its availability,” said Mr T. Nandakumar, Secretary, Food and Public Distribution, in Bangalore last week.

The statement was made on the heels of an estimated record production of 16.78 million tonnes during the current crop year to June against 15.10 million tonnes last year. The production is seen far exceeding the domestic demand of around 14 million tonnes, including for feed and starch industries which are the primary consumers of the grain.

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