Ban on corn export to end, with market share at stake

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Singapore, New Delhi, Aug 28 : India is unlikely to extend a ban on corn exports beyond mid-October, given the upcoming bumper harvest and soft local prices. But New Delhi should relent even sooner to prevent rivals from grabbing marketshare. Although traders see little hope of government easing export curbs on rice and wheat as the fragile federal coalition faces polls in 2009 at a time of double-digit inflation, they said that corn that was an entirely different story.

But unless the ban is lifted sooner than the current October 15 expiry, Indian suppliers could lose business in the Southeast Asian markets which they have worked hard to crack. “Earlier Indian corn was not very acceptable in Southeast Asia. We shouldn't lose that market,” said Atul Chaturvedi, head of the agricultural arm of Adani Enterprises Ltd. “And why should we deny our farmers the opportunity of getting better prices in the export market?” he added.

Though India's corn exports make up just 3% of the over 100-million tonne global trade, it has become an important supplier to countries such as Malaysia, Vietnam and Indonesia, offering last-minute supplies when there are wild swings in prices. India has also benefited from China's absence from the market due to its own export curbs, and with corn stocks in the US, likely to dwindle in 2009, to their lowest level in 13 years. But with surging global food prices, New Delhi's recent ban on corn exports runs the risk of losing marketshare to more traditional rivals in Latin America and the US.

On July 3, New Delhi stopped exports of corn until October 15 after corn-consuming industries, such as food, starch and poultry, urged the government to curb exports to check prices and ensure stable local supplies. “With elections coming closer, easing of exports curbs on essentials like rice and wheat are not likely to happen,” said Amit Sachdev, a representative of the US Grains Council in New Delhi.

But allowing domestic corn prices to slide further may be hard to justify to farmers already suffering from surging agriculture-input costs. US corn has lost around quarter of its value since hitting an historic high of $7.65 a bushel at the end of June.