Indian corn exports surge on expectations of overseas ban

Nov 28 | Updated: Nov 29 2006, 08:46am hrs
Indias corn exports surged to 100,000 tonne in the past two weeks, equaling quantities sold in the previous 45 days, as traders hastened to beat an expected ban on overseas sales of the grain, industry officials said.

A domestic shortage of corn has led to local prices rising by half to Rs 900 per 100 kg in some markets. India may accede to a demand from poultry farmers and other users of corn to ban exports of the grain caused by a fall in production and increased domestic consumption, trade minister Kamal Nath said on November 17.

Exports have really picked up in the past two weeks, Amol Sheth, president of the All India Starch Manufacturers Association said on phone from Ahmedabad, citing exports of 100,000 tonne in the past 15 days.

If India doesnt ban exports, it could touch one million tonne as all of southeast Asia is short of the grain.

Corn prices reached a decade high on Monday on the Chicago Board of Trade as dry weather cut US output and demand for the grain to make ethanol surged.

Lured by high prices, Indian exporters have contracted to sell as much as 200,000 tonne of corn in the past two months to buyers in southeast Asia.

Everybody is trying to ship out as much as they can before a ban is announced, Manish Gupta, managing director of Gujarat Ambuja Exports Ltd, a trading firm and maker of starch, said. Banning exports seems to be the only option and it could come anytime.

Lower output

Indias corn production may fall 15% from a year earlier to 12.8 million tonne, according to Sheth of the Starch Association. Corn users such as poultry feed and starch manufacturers have asked the government to ban exports and permit imports duty-free to check spiraling prices.

The domestic shortage may prompt corn import for the first time in five years. Ninety percent of Indias corn production is used to make animal feed and starch.

Imports at current prices do not look feasible. But in the long run, there may be some imports, Atul Chaturvedi, president at Adani Enterprises Ltd., said. Focus currently is on exports.

Corn for March delivery rose 2.25 cents, or 0.6%, to $3.8825 a bushel on Chicago Board of Trade on Monday, after earlier reaching $3.935, the highest since August 1996. Prices have jumped 80% this year after hot, dry weather in July reduced US production and demand for the grain to make ethanol rose to a record.

World corn output in the 2006-07 season, which began on October 1, may total 688.7 million tonne, down from 689.1 million tonne forecast in October, the US department of agriculture said on November 9. Global consumption will rise to a record 723.3 million tonne from 698.7 million tonne last year, the USDA said. It would be the sixth time in the past seven years that demand exceeds output. Bloomberg