maize (corn) prices are trading higher by about 34% year-on-year at Rs 2,225 per quintal (ex-warehouse Chhindwara). Due to higher prices, the government is considering curbs on the export of maize.
As per market sources, the Ministry of Food Processing Industry has written to the Commerce Ministry proposing a ban after starch manufacturers raised the case of higher maize prices and non-availability. As maize is not included under the essential commodity, it is unlikely that the government would impose an export ban.
India is not a regular exporter of maize and comes under the export picture whenever there are global shortages or supply chain crises across the world. India’s maize export share to production is only about 10% in the previous two years. India exports maize mainly to South Asia and a few Southeast Asian nations, major export destinations are Bangladesh, Nepal, Vietnam, and Malaysia.
In the coming months, the export demand from India for maize to the South East Asian nations would fade as their demand would shift towards South American corn as Argentina and Brazil start their new crop harvest.
India would be uncompetitive for exports in the Southeast Asian market as the FOB rates for Argentina corn is $282.5/MT, and Brazil is $287.25/MT while India is offering at $305/MT, and the CIF quote for Vietnam is $330.75/MT.
On the other hand, there are no severe supply shortages of maize crops in India this year. The Kharif season maize crop was estimated at 21.31 Million MT, 2% lower than the previous year’s 21.77 Million MT.
Also, the Rabi season maize sowing is progressing well, and it remains 50% higher than last year at 10.48 Lakh Ha. This indicates the rabi maize crop production would be higher and likely to offset the drop in the Kharif crop. This would keep the supply side at ease.
In the ongoing Kharif season, maize prices have bottomed out at Rs 2,100 per quintal (ex-warehouse Chhindwara). The strong demand for maize from stockists, traders, exporters, and feed manufacturers kept the prices firm despite the peak arrival season. Also, the rail rake movement of maize remains strong this year.
Meanwhile, the domestic maize demand is expected to improve this year, domestic demand would increase by 2.3% year-on-year to 28.8 million MT due to an increase in feed demand by 2.5% year-on-year to 17 million MT while food and industrial demand would increase by 2% year-on-year to 11.7 million MT. Hence, strong growth in maize demand coupled with firm prices for substitute feed grains would keep the maize prices sentiment bullish.
We believe maize prices would trade sideways in the coming days unless there is clarity on the export ban. Thereafter, maize prices would trade bullish towards Rs.2300 per quintal in the short term and Rs.2500 in the medium term.
Origo Commodities Maize Production Estimate: CY 2022-23
Indrajit Paul, Senior Manager – Commodity Research, Origo Commodities
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