Maize seen ruling firm despite record crop estimate

At the Karimnagar Agricultural Produce Marketing Committee yard in Andhra Pradesh, maize (corn) was quoted at Rs 965 a quintal at the beginning of the year. On Thursday, it ruled at Rs 1,223 with about 500 tonnes being traded at the market yard.

Maize prices have increased over 25 per cent in the last three months and are set to rule firm in the coming days too. This is despite the rabi crop beginning to arrive in the market and the Centre estimating a record crop of 20.23 million tonnes (mt).

Last year, production was 16.72 mt against 19.73 mt in 2008-09 after the kharif crop was affected by a truant monsoon.

While exports are seen as a reason for the rise in prices, domestic demand, too, has played a role in the firm price trend.

“Maize prices are ruling firm because a sizeable volume of exports have taken place,” said Mr T.P.S. Madan, an exporter.

“Even China has begun buying small quantities from us to re-export to North Korea,” said Mr Madan Prakash, Director of Rajathi Group of Companies that exports agricultural products.

From December, when the kharif maize arrivals began, till now, exports could be around two mt.

“Exports are taking place from Kakinada, Mumbai, Kandla, Chennai, Tuticorin, New Mangalore and Visakhapatnam ports,” said Mr T.P.S. Madan.

When exports of the new season began, maize was quoted at $245 a tonne f.o.b. “Currently, maize is quoted up to $310 f.o.b,” said Mr Prakash. “We are getting maize at around Rs 1,300 a quintal to Mumbai or Chennai from producers,” he said.

Indonesia, Malaysia and Vietnam are the main buyers apart from China's purchase of small quantities.

Asked if the problem faced in exports to Vietnam had been solved, Mr T.P.S. Madan said the issue had been rectified and a shipment had to be totally fumigated with methyl bromide 3 days before reaching the port of landing.

But a section of exporters said Vietnam was coming up with new norms that could make shipments costlier. They want exporters to fumigate once before loading the consignment in container and then before reaching the destination, said sources.

“Prices are up in the global market too as China is buying from the US,” said Mr T.P.S. Madan.

Countries such as Indonesia, Vietnam and Malaysia prefer to buy from India due to freight advantage. Moreover, they can buy in small quantities from here. On the other hand, if they have to buy from the US or Argentina, they have to buy in large Handymax and Panamax vessels. Besides, they don't want to build inventories.

Exports have begun to slow a bit and trade sources attribute it to hopes of a drop in price due to new arrivals.

“The new crop is due to arrive in Andhra Pradesh,” said Mr Prakash.

In the short-term, about 3-3.5 lakh tonnes are expected to be exported since chicken and pig farms in South-East Asian and Far-Eastern countries are on the rise.

“The current scenario is such that non-vegetarian food looks to be cheaper than vegetarian food, resulting in higher demand for chicken and pork,” said Mr T.P.S. Madan.

On the other hand, farmers and traders, too, are holding back stocks, hoping for prices to firm up. This has resulted in exports of small shipments only.

“Prices are unlikely to see any sharp fall. This is because domestic demand is good,” said Mr Prakash.

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