Tight global supplies to continue driving India’s maize exports till May

Maize (corn) exports from India are expected to go on till May with global supplies projected to be tight this year and demand continuing from Malaysia and Vietnam.

The Food and Agriculture Organization (FAO), a UN arm, and the US Department of Agriculture have both projected that the ending stocks this marketing season (July 2020-June 2021) would be lower compared with last year. Both agencies have, however, raised the ending stocks in their reports this month on higher production estimates.

The FAO’s Agricultural Marketing Information System (AMIS), in its report for this month, said maize ending stocks will be 275.7 million tonnes (mt) against 301.7 mt. The ending stocks size for this season has been raised by two mt from last year.

The USDA’s World Agricultural Supply and Demand Estimates (WASDE), in its report, projected the ending stocks at 287.67 mt (303.13 mt). The USDA has also increased its projections from last month marginally by over one mt.

AMIS said maize production would be higher at 1,152.8 mt (1138.5 mt). Compared with last month, the estimate has been raised by 3.5 mt. USDA’s WASDE estimated maize production this season at 1,136.31 mt (1,116.53 mt) with the projections being raised by two mt from last month.

“Production estimate has been raised further this month on bigger than earlier anticipated outputs in the EU, Ukraine, and several countries in Sub-Saharan Africa, in particular Ghana,” said AMIS.

It said utilisation would touch a record 1,1798.5 mt against 1,158.2 last season, while the USDA put it at 1,151.77 mt.

AMIS said that there would be a significant call in the stocks from last season in view of “sharp drawdowns in China, the US and EU”.

Robust shipments

The USDA said it was raising the projections for India’s maize exports, which have already touched a six-year high.

According to Agricultural and Processed Food Product Export Development Authority (Apeda), exports of other cereals in which maize figures increased to 18.78 lakh tonnes (lt) during the first nine months of the current fiscal compared with 3.71 lt during the same period a year.

According to Apeda data, based on Kolkata-based Director-General of Commercial Intelligence and Service, maize exports during April-November of the current fiscal were 14.18 lt compared with 3.70 lt a year ago and 10.51 lt in 2018-19.

“Supplies are tight within India itself and we expect the situation to ease in April when the new crop will arrive from States such as Maharashtra and Andhra Pradesh,” said Agri Commodities Exporters Association (ACEA) President M Madan Prakash.

“Quality maize is not available in India currently,” said Bimal Benghani, Managing Director of Kolkata-based exporting house Bengani Food Products. This has impacted maize prices which have currently dropped to below ₹1,490 a quintal in various terminal markets across the country compared with rates that topped ₹1,600 a month ago.

Prices to stay steady

Prices have, however, been ruling below the minimum support price of ₹1,850 a quintal fixed by the Centre for the current season.

According to the International Grains Council, maize export prices currently ranged between $237 (₹17,000 from Argentina) and $263 (₹19,200 from Brazil) a tonne.

“We are offering maize to Vietnam at $275 cost and freight a tonne (₹20,075),” said Prakash, whose Chennai-based firm Rajathi Group exports agricultural products including maize and onion.

“When the season started, maize was offered at $220 a tonne (₹16,075) a tonne. But freight charges have more than doubled now from $200 (₹14,600) to $500 (₹36,500) for a 20-foot container,” he said.

“Though Bangladesh is not buying now, Malaysia and Vietnam are buying. Shipments are continuing at a good pace,” said Bimal Bengani.

During the April-November period, Bangladesh accounted for 9.95 lt of the total 14.18 lt, while Nepal accounted for another 3.82 lt. Bangladesh imported Indian maize since its crop was affected by unseasonal rains and floods last year.

According to Prakash, exports have slowed a tad this month compared to January and February. “But we expect shipments to pick from next month,” he said.

“Bangladesh will begin buying our maize from May onwards,” the Kolkata-based firm’s managing director said.

ACEA’s Prakash said that there was less headroom for maize prices to rise further. But Bengani sees little scope for prices to drop too, though the starch industry, the second-biggest consumer after the poultry sector, had ample stocks.

Though the poultry sector is not in a good condition, the industry expects shortage to drive demand as many birds were culled during the recent outbreak of bird influenza.

According to Dutch multinational banking and financial services Head of Commodities Strategy Warren Patterson wrote in his analysis of USDA’s WASDE report that the trade had expected further downward revision of ending stocks.

This, perhaps, is another indication that the headroom for price rise could be limited.

India’s maize exports this fiscal are in contrast to last financial year, when the commodity’s prices zoomed to ₹2,600 a quintal on supply shortage. The industry imported 3.12 lt of maize in 2019-20 to overcome the shortage compared with about 30,000 tonnes import during 2018-19.

Last year’s prices have encouraged farmers to go for higher planting this year, resulting in the Centre projecting a record 30.16 mt output of maize in its second advance estimate for the current season against last season’s 28.77 mt.

The higher production has now come in handy for exports, which had surged to a record 47.88 lt in 2012-13 before tapering off to a low 3.71 lt last fiscal.

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