Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

India corn exports pick up, but still set for annual drop

Jun 14 2014, 01:39 IST
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SummaryThe demand has largely been driven as Indian diets change due to living standards.

Indian corn exports have picked up in the last few months as swelling supply crimps prices, but the rise will not be enough to stop overall shipments for 2013/14 dropping nearly a quarter after a poor start to the year, traders said.

The annual decline is good news for rival exporters such as Brazil and the United States, which are hoping to expand sales to India's traditional customers in Southeast Asia including Malaysia, Indonesia and Vietnam.

"We've had a sudden spurt in export deals in the past few months, but the jump in shipments is not enough to help this year's exports cross last year's levels," said Raju Choksi, vice-president at India's top corn exporter Anil Nutrients.

Corn shipments are likely to fall to 3.5-3.7 million tonnes in the year to September 2014 from 4.7 million tonnes last year, Choksi said by telephone from the western city of Ahmedabad.

Exports between October and April totalled 2.1 million tonnes, about a million tonnes less than the same period in 2012/13, he added.

Indian corn prices were $20-$25 a tonne higher than South American grain on a free on board basis (FOB) at the start of the marketing year, said a trader from Nizamabad, a trading hub in the newly formed southern state of Telangana.

But recent export deals have been struck at $240 a tonne FOB, while supplies from South American would cost about $265 a tonne FOB in most Southeast Asian countries, Choksi said.

Indian prices have become more competitive as domestic supplies have swollen in the wake of the winter crop that was harvested in March, traders said.

They also said that appetite in Southeast Asia had been picking up, buoyed by demand for animal feed as a growing middle class in the region starts to consume more meat.

India's share of the 90 million tonnes of annual world corn trade is small, but it has become a key supplier to Southeast Asia due to its proximity and as it is willing to supply in small containers or vessels of 15,000-20,000 tonnes, rather than the 50,000-tonne panamax ships that ply the waters from South America.

But exports could also take a hit in 2014/15 if an expected El Nino weather pattern leads to patchy monsoon rains, cutting output and pushing up local prices.

"Forecasts of poor monsoon rains are worrying and we could be heading for a bit of trouble. Any drop in our exports would encourage Malaysia, Indonesia and

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