Agri Business

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

Subramani Ra Mancombu Chennai | Updated on June 24, 2021

Importers worried over Islamabad’s track record; deal terms hinder progress

Pakistan’s efforts to offer corn (maize) in the global market at a price lower than India and other competitors have met with lukewarm response with practically no takers for it till now.

“They (Pakistan trade) have been in the market for over a fortnight offering corn at $282 ₹20,975) a tonne cost and freight Ho Chi Minh, Vietnam. But given Pakistan’s exporters’ track record, there are no takers,” said a New Delhi-based trading source.

Pakistan’s offer is at least over $20 a tonne (₹1,500) lower than India’s offer to South-East Asia as it is trying to export at least one million tonnes (mt) of corn this year.

Pakistan offers corn cheaper than India in South-East Asia

Quality issues

“Pakistan’s export quality is a problem. They simply load the consignment but don’t bother to preserve moisture or take measures for its safety. As a result, many a time, the quality of the produce from Pakistan has been affected,” said a Chennai-based trading source, who has the experience of trading with the neighbouring country’s shippers.

Two traders in the know of the developments said that Pakistan traders are insisting on opening of letters of credit (LC) but importers, mainly in Vietnam, are reluctant.

“Some in Vietnam can open LCs but it is Pakistan’s credibility as an exporting destination that is affecting,” said the New Delhi-based trading source.

To produce ethanol, India will use corn as feedstock

“Vietnam importers are seeking performance guarantees but Pakistani traders are reluctant. Traders in Hanoi are ready to offer DPs (documents against payment) but Pakistan sellers are not willing to accept it. All these have led to a standstill,” said the Chennai-based source.

DPs is a process where the importer collects his documents from his bank on payment for the consignment by a mutually agreed date.

Indian supplies

Pakistan came up with its corn offer when Indian exporters increased supply in the global market amidst a rally following China’s huge imports, strong US sales and Brazil shipping woes.

Pakistan’s competitive offer came at a time when Indian exporters had signed contracts to supply at least four lakh tonnes of corn to feed producers in Malaysia, Vietnam, Sri Lanka and Bangladesh until next month.

India's booming corn exports amid global rally ease supply worries

Pakistan stepped on to the global arena to export corn after its production increased over 7 per cent to 8.47 mt this year. It is the fourth-most important crop after wheat, rice and cotton.

Corn up 36.5 per cent

Corn prices have gained 36.5 per cent this year globally with prices on the Chicago Board of Trade rising to $6.60 a bushel (₹19,325) a tonne for delivery in July.

“We are still offering corn at $305 a tonne cost and freight South-East Asia but buying has been slow by countries such as Vietnam, which have been affected by the second wave of Covid pandemic,” said M Madan Prakash, President, Agri Commodities’ Exporters Association.

According to the International Grains Council, Argentina is offering corn at $241 (₹17,925) a tonne, the US at $295 (₹21,925) and Brazil at $279 (₹20,750). The offers are up between 54 per cent and 80 per cent from the year-ago period.

In the domestic market, corn prices are ranging between ₹1,500 and ₹1,850 a quintal compared with the current season’s (July 2020-June 2021) minimum support price (MSP) of ₹1,850 a quintal. For the next season, the Centre has increased the MSP to ₹1,870.

Domestic offtake hit

India has been able to spare corn for exports at a competitive price as consumption by the poultry sector, the main consumer, has been affected by Covid pandemic shutdowns.

Last fiscal, India’s corn exports hit a six-year high with over 2.5 million tonnes being exported. Bangladesh, Nepal and South-East Asia were the main buyers.

The high shipments last fiscal were also on heels of a record 30.24 mt of corn production this season compared with 28.77 mt the previous one.

Trade analysts expect India’s corn exports to continue the good show at least until next year as Brazil’s shipments problems due to Covid pandemic continue.

In addition, China’s huge purchases have resulted in freight charges more than doubling since it has engaged more vessels to ship more commodities.

However, the US Department of Agriculture has projected India’s corn exports to drop by six lakh tonnes this fiscal as Bangladesh is expected to import three lakh tonnes of corn lower than last year.

Published on June 23, 2021

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