Chinese tapioca product buyers have started sourcing their raw material from India following tightening of prices in Thailand to take advantage of its dominance in the world tapioca market.
Thailand has increased tapioca starch prices by 10-15% in the past five months. The price increase was due to decline in crop output due to extreme weather conditions and pest attack. Thailand contributes approximately 80% of the tapioca to the international market and its price is always a benchmark for world markets.
According to a survey by the Thai Tapioca Starch Association in the first quarter of this year, crop output for 2009-10 was estimated at 22 million tonne, down 20% from the earlier projections of 27 million tonne made in August 2009.
Talking to FE, J Manjunath of Sivadarsh Exports and Imports said starch prices hit 19.50 baht a kg (one baht is equal to Rs 1.49) on average in August this year, driving export prices above $600 per tonne, compared with 12 baht per kg and $400 a tonne earlier this year and eight baht a kg and $280 a tonne last year. Where as the tapioca starch price in India has suddenly crashed in the past one month.
Currently tapioca starch price is being quoted at Rs 2,300 per 90-kg bag from Rs 3,200 in January this year. This sudden price crash in the domestic market has dragged down the export price as well to the current levels of around $ 500 per tonne from $ 750 in January.
Tapioca prices crashed in the Indian market was due to unseasonal crop arrivals from Kolli hills region in Salem belt of Tamil Nadu.
Generally in India , the major tapioca arrives in the market during November-February and prices used to be at lower band during this period. But this year prices ruled at higher band as several farmers have stocked their products expecting higher prices on account of lower crop output in India.