Futures prices down 4% on export ban news

All the four major contracts of Maize listed on the National Commodity & Derivative Exchange Ltd (NCDEX) hit 4% lower circuit on Thursday on heavy selling pressure after the announcement of export ban in maize till October 15, 2008.

Maize July contracts on NCDEX were down 4% or Rs 38.50 to trade at Rs 953.50 per quintal on Thursday (on 5 pm) over previous day while August and September contracts also fell sharply by 4% to trade at Rs 998.50 and Rs 1,004 per quintal, respectively.

October contracts also fell by nearly 4% to trade at Rs 948 a quintal over previous day. In futures market, prices rose from Rs 680 levels to over Rs 1,000 levels in the last few months.

The government has put a ban on export of Maize with immediate effect to check prices of corn, poultry and other products, sources said.

?We are welcoming this decision. On my opinion, feedmeal prices (maize and soyameal) of key inputs will come down in the next few days and it will help farmers a lot. We expect chicken production cost also to come down. Prices have increased significantly from Rs 12 a kg to Rs 17 a kg in the past six months,? Ricky Thaper, treasurer, Poultry Federation of India told FE.

Feedmeal comprises of around 65% of the total cost of production of chicken.

?Also, we expect the government to put a temporary ban on export of soyameal now,? he said.

Maize spot prices in the country are ruling at over Rs 900 a quintal in major mandis which a year-back was around Rs 820-Rs 830 while in the US market, prices have touched $400 per tonne (Rs 1,720 a quintal).

?Prices may come under further pressure in the short term on long liquidation in futures trade and weakness in spot markets,? an analyst with Karvy Comtrade said.

Maize exports have increased as prices have risen to $230-240 per tonne (FOB) this year from around $200-210. Maize is a key input for poultry, livestock and starch industries.

?The impact of the ban will be minimal on maize prices and sowing as realisations have already gone up significantly in the last one-year,? Amol Sheth of All India Starch Manufacturers Association said.

India exported 0.5 million tonne in 2006-07 (October-September) while this year exports are expected to rise to around 2.5-3 million tonne. The country?s maize production in 2007-08 is expected to be around 16 million tonne to 17 million tonne, while last year it was around 13 million tonne to 15 million tonne.