Export Demand, High MSP May Prop Up Maize Prices

MUMBAI: Export demand of maize at competitive rates and expected good procurement by the government in Andhra Pradesh at a high minimum support price (MSP) are likely to keep prices range bound to slightly firm despite good production estimates for the kharif season.

Exporters reckon that India stands to gain after China imposed a ban on exports on the commodity. Beijing is also seen as discouraging the setting up of any new corn processing plant in the county considering that there is an acute shortage of maize in the country.

One of the largest exporters of maize from India, who did not want to be identified said that India is competitive in the global markets at current price levels of $220 per tonne FOB. Exports looks promising with the industry set to top the 6 lakh tonne mark against last year’s exports of three lakh tonnes, the exporter said.

“Even after good crop estimates from America that may increase its share in exports, India has an edge with competitive freight rates,” said this exporter. The major markets where India exports include Middle East, Srilanka, Bangladesh, Nepal where America also exports.

Locally, the arrivals have picked up at Nizamabad in Andhra Pradesh and arrivals from other parts will start by October last week while arrivals from Karnataka and Maharashtra will start by November. The spot prices of maize loose at Nizamabad is Rs 615-Rs 630 per quintal. The futures prices of the commodity by 5pm on NCDEX were down 1% at Rs 715 levels from the previous close. A research analyst from Angel Commodities said prices were down on Wednesday due to arrival pressure and good production estimates by the government.

Rajeev Puri from Andhra Pradesh-based Sukhjeet Starch and Chemicals said, “Since the government has been active in procurement in Andhra Pradesh, the prices would be range bound between Rs 600-Rs 625 in the next 45 days at Nizamabad, though they may be down at 575 levels in Karnataka and Maharashtra where the government is not that active.”

With a good MSP of Rs 620 per quintal against the previous year, the government is expected to procure over 15 lakh tonnes against previous year’s 9.55 lakh tonnes, Mr Puri said.

According to the government, India is likely to produce 13.71 million tonnes of maize this kharif season, which is 20% more as compared to 11.45 million tonnes last kharif. The industry expects the production to fall between 14mt-15mt with good yield. Nizamabad-based trader, Amritlal, said this year, the farmers have majorly used seeds by the companies which increased the yield against the usual practice of using seeds from their previous crops. “In one acre, farmers are now producing 30-40 bags against 25-30 bags last year,” Mr Amritlal said.