Agri Business

Demand for Indian corn exports slackens as domestic prices rule high

Subramani Ra Mancombu | | Updated on: May 24, 2022
Corn rates in India are ruling higher in view of demand from the poultry sector

Corn rates in India are ruling higher in view of demand from the poultry sector | Photo Credit: RAO GN

Some exporters still recovering from last fiscal’s payment problems

Indian corn (maize) is witnessing a slack demand for exports, particularly from South-East and West Asian countries, as its competitiveness has been affected by high domestic prices, while exporters are yet to recover from the payment problems they faced last fiscal.   

The slack demand for corn comes amidst a buoyant demand for Indian wheat and rice in the global market. “Argentina is offering corn at $380 a tonne C&F in Asia, while our corn is not competitive as the coarse grain, for example from Davanagere delivered at ports, costs ₹28,000 ($360.76),” said a New Delhi-based analyst, who did not wish to be identified.

No new enquiries

“Last year, during the same time we had good enquiries from new buyers. This time, we are not getting any new enquiries. Corn exports have slowed down,” said M Madan Prakash, President, Agri Commodities Exporters Association (ACEA). 

According to the International Grains Council (IGC), corn prices were quoted at $318 a tonne during the weekend for delivery from Argentina, while Brazil offered its produce at $322 and the US at $346. At 344, the maize sub-index is up 14 per cent year-on-year. 

On the Chicago Board of Trade, the benchmark corn futures were quoted at a four-week low of $7.81 a bushel ($307.46 a tonne) as speculators bought wheat and sold corn. Last month, it had surged to a 10-year-high of $8.1 a bushel.

Rain affects rabi crop

Prices in India are ruling higher in view of demand from the poultry sector, which uses it for compound feed.  In addition, the current rabi crop has been affected by rains in some of the growing regions such as Bihar. 

Currently, the national weighted average modal price (rates at which most trades take place) is ₹2,088 a quintal, higher than the minimum support price of ₹1,870 fixed by the Centre for the current season to June. Arrivals since May 1 till now are provisionally estimated at 1.53 lakh tonnes against 69,718 tonnes during the year-ago period. 

Globally, corn prices have increased since supplies from Ukraine, the fourth-highest global exporter, have been affected by the war it is fighting against Russia. 

More from Argentina

But prices have not zoomed off as in the case of wheat as Argentia, the second-largest global exporter, is likely to raise its shipments limit to 35 million tonnes (mt) from 30 mt last year. Some analysts even see exports topping 40 mt. 

According to the US Department of Agriculture (USDA), corn exports from the US were higher at 66.9 mt last week, the highest for this marketing year to August. “Corn exports are also slack as high prices are encouraging farmers to hold back their produce in India. At least 40 per cent of the crop harvested have found their way into warehouses in the growing regions such as in Bihar,” said Mukesh Singh, Director of Mumbai-based MuBala Agro. 

Shippers burn their fingers

“If high domestic price is one issue, the other is Indian exporters being affected by disputes with some buyers in Vietnam, Singapore and Malaysia,” said the analyst.

“Last year, similar disputes arose with rice shipments too,” said ACEA’s Prakash. 

Singh said exporters were facing problems as buyers had defaulted on the payments. The analyst said buyers began to bargain once the consignment reached their shores, leaving sellers with limited options. In addition, the sellers did not get insurance for the period their consignments were detained at the port of delivery due to the dispute.

“Quite a few of the exporters have burnt their hands in view of these deals,” the analyst said, adding that there was, however, no problem with shipments to Indonesia. 

The problems regarding exports of corn comes on the heels of the coarse grain shipments touching a six-year high of 3.03 mt in the 2020-21 fiscal and an eight-year high of 3.85 mt last fiscal.  

Singh said corn exports to neighbouring countries such as Bangladesh continue, though high prices are proving to be a hurdle.

Anand Chandra, Co-founder, Arya.ag, said overall the corn rabi production has witnessed a good output with regions such as Bihar performing exceedingly well. This upward momentum in output volumes is expected to sustain in the coming days. Business opportunities from an export perspective is anticipated to continue as witnessed during the Kharif season.

Published on May 24, 2022
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