Agri Business

Bangladesh offers hope as corn exports to South-East Asia slow down

Subramani Ra Mancombu Chennai | Updated on August 25, 2021

Domestic prices rise on demand; Delta variant of Covid in South-East Asia hits shipments

With corn (maize) prices rising in the domestic market due to demand from the poultry and starch sectors, its exports have slowed down, particularly to South-East Asia.

Factors such as spread of Delta variant of Coronavirus in countries such as Vietnam and Thailand and high freight charges have affected its shipments.

However, exporters are now focussing on Bangladesh as they enjoy freight advantage and are able to send the consignments through various modes of transportation, traders say.

Surge in freight rates

“We have not done any shipments to South-East Asia for almost a month now. The last we exported was a small quantity at $320 (₹23,775) cost and freight,” said M Madan Prakash, President, Agri Commodities Exporters’ Association (ACEA).

“We were offered corn for exports from Andhra Pradesh at ₹19,000 but it wasn’t feasible given the surge in freight rates, particularly for containers,” said Prakash, whose Chennai-based Rajathi Group exports agri-commodities such as maize, onions and chilli.

Last month, corn prices surged higher than wheat prices for the first time in a decade over fears that dry weather in Brazil and the US could affect the crop. However, since then, corn prices have retreated on low demand for feed, while wheat prices have increased further on low global output.

On Wednesday, the active corn contract on the Chicago Board of Trade was quoted at $5.42 a bushel (₹15,875 a tonne), off from a six-week low on the US crop being lower than market expectations.

New Malaysia norms

“Corn exports have also been affected by Malaysia announcing new specifications from April. This allows access only for established players, while others have got affected,” said Mukesh Singh, Director, MuBala Agro Commodities Pvt Ltd.

A Delhi-based trade analyst said a major reason for corn exports slowing down is the Covid shutdown in Vietnam and Thailand, which use the grain for feed purposes.

“Brazil has also made a comeback on the corn front, making it tough for India,” he said.

Singh said this has resulted in Indian corn losing its competitiveness in South-East Asia.

No takers for Pakistan’s low-priced corn in global market

According to the International Grains Council, corn from Argentina is currently quoted at $236 (₹17,550) a tonne, while Brazil’s grain is offered at $270 (₹20,075) and US corn at $254 (₹18,875). Though corn prices are over 40 per cent higher year-on-year, they are off their peaks seen this year by 10-20 per cent.

Rise in local prices

Data from the Agricultural and Processed Food Products Export Development Authority (APEDA) show that Vietnam imported over 2.5 lakh tonnes (lt) of corn during April-May this fiscal. The whole of last fiscal it had imported nearly five lt.

On the other hand, prices in the domestic market have increased by over ₹2,000 a tonne in the last couple of months, making it tough for exporters to be competitive in markets such as Vietnam and Thailand.

According to the Ministry of Agriculture, corn prices at agricultural produce marketing committee (APMC) yards are currently ruling from ₹14,500 a tonne in Chhattisgarh to ₹18,000 in Uttar Pradesh.

The Centre fixed ₹18,500 a tonne as minimum support price for corn last season (July 2020-June 2021). For the current season, it has been fixed at ₹18,700.

“We were competitive as long as domestic prices ruled below ₹16,500 a tonne. Once prices topped that level, we were outpriced,” said Singh.

From Bihar to Bangladesh

But hope for corn exporters has come in the form of Bangladesh, which is importing a good quantity from India. “We are able to get corn at a competitive price from farmer producer organisation in Bihar, where ample supplies are available. From there, it is easy to transport to Bangladesh,” the MuBala Agri Commodities official said.

Corn is sent by trucks via India-Bangladesh borders, while some shipments are also sent by rail.

“At least 150 trucks laden with corn go to Bangladesh every day as demand for feed in Bangladesh is high,” said Singh. This would mean that over one lakh tonnes of corn are being sent across the border every month.

“We cannot be competitive if corn prices are above ₹18,500 a tonne,” he said.

The poultry sector in the neighbouring country is emerging more vibrant than India with its farmers vaccinating their birds against endemics such as avian influenza. In India, poultry farmers are still showing reluctance to vaccinate their birds against the menace.

Last fiscal, Bangladesh imported over 12 lt of corn from India. During April-May this year, it bought over one lt, according to APEDA data.

Corn exports have been aided by a record 31.51 million tonnes (mt) production last season compared with 28.77 mt during 2019-20. During the current kharif season, the area under maize is up 1.8 per cent at 79.6 lakh hectares as on August 20.

Published on August 25, 2021

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