Indian maize prices look up on renewed demand from poultry sector

Maize (corn) prices in India have increased by nearly Rs 200 a quintal in the last couple of weeks as demand, particularly from the poultry sector, has re-emerged with the curbs for the Coronavirus (COVID-19) pandemic being relaxed across the country.

“Maize prices have increased to Rs 1,600 a quintal now. There is a rising trend in the prices after it was ruling around Rs 1,450 a couple of weeks ago,” said Vangili Subramanian, President, Tamil Nadu Egg Poultry Farmers Marketing Society.

“Of late, maize prices have begun to rise. This year, we expect the supply to be good and hope prices won’t surge like last year,” said K Singaraj, Tamil Nadu Poultry Farmers Association President.

While maize prices are ruling at Rs 1,600 a quintal at the consumer end, in primary agricultural markets they are ruling around Rs 1,400 a quintal in most parts of the country.

Current prices for maize are against the minimum support price (MSP) of Rs 1,850 a quintal for the current crop year (July 2020-June 2021). During the same time last year, prices were ruling around Rs 1,700-1,750.

“Prices are currently ruling low, especially in the north because there is high moisture in the maize arrivals,” Subramanian said.

According to the first advance estimates of foodgrains production for 2020-21, maize production during the Kharif season is estimated be 19.88 million tonnes against 19.63 million tonnes last year.

The industry expects production to be higher as last year’s price surge in maize had encouraged many growers to opt for the crop this year. Farmers have grown maize on 77.69 lakh hectares during Kharif season this year against the normal 74.70 lakh hectares.

“Last year, maize prices surged to as high as Rs 2,600 a quintal and we had to import,” said Subramanian, and added that the actual crop situation will be known by end of this month.

Singaraj said that maize supply has been good so far this year. “The Tamil Nadu crop will begin arriving this month. It is good in regions such as Perambalur, Ariyalur and Thiruvannamalai,” he said.

Last year, Indian imported 3.12 lakh tonnes of maize which was 10 times the imports during 2018.

“All the imported maize has been utilised by the industries,” said Subramanian.

India has turned a net importer of maize as demand from the poultry industry and starch manufacturers has been increasing over the last few years. In order to meet the industries demand, the Union Government annually allows import of five lakh tonnes under tariff rate quota (TRQ) regime that permits shipments into the country at a lower Customs duty of 15 percent.

In the normal circumstances, maize import attracts 50 percent duty besides five percent Integrated Goods and Services Tax and 10 percent social welfare surcharge.

At least 70 percent of maize production comes from rain-fed areas in the country as the crop tolerates dry conditions and requires a lower amount of water.

In view of the prices ruling around Rs 1,600 a quintal, enquiries are coming from other countries for Indian maize.

“We have got enquiries from Malaysia and Vietnam. We got maize for as low as Rs 1,300 a month ago but now prices have gone up to Rs 1,700,” said Madan Prakash, Director of Chennai-based Rajathi Group that exports agricultural products.

“The market has turned good for growers but if prices top Rs 1,700 then exports are ruled out,” he said.

As long as Indian maize is quoted between Rs 1,500 and Rs 1,700 a quintal, there is export demand. Once it tops the level, then Brazil exports turn competitive.

In the global market, the spot price for maize ruled at $157.08 (Rs 11,675) a tonne.

“Even if we quote USD 5 higher than other destinations, we get buyers. This is because we can supply small quantities such as 500 tonnes. Also, we can deliver within 25-30 days to the buyer compared to over 45 days other supplies like Brazil take,” Prakash said.

When the prices difference is more as seen now, then India maize loses out its competitive edge despite the fact that the importer will have to look for a few other buyers to join and together buy huge cargoes such as 50,000 tonnes from Brazil, the US or Argentina.

Though maize prices are ruling lower, the poultry sector is now concerned over rising soybean prices, which cost Rs 4,000 a quintal. Soybean and maize are used in the compound feed for poultry animals.