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Maize prices to enter uncharted territory

Cogencis, Friday, Jan 4

By Manashaa G and Sampad Nandy

NEW DELHI/MUMBAI – Prices of maize are likely to venture into uncharted territory, rising beyond 2,000 rupees per 100 kg in the next one month, sharply above the minimum support price of 1,700 rupees that the coarse grain is currently hovering around. 

Market players attribute the likely spike in prices to shrinking supplies amid fear of a much smaller crop in 2018-19 (Jul-Jun). 

In early December, prices had hit a record high of 1,850 rupees per 100 kg in spot markets but have since then corrected to 1,700-1,750 rupees on talk that the Centre may cut import duty.

India's maize output in both kharif and rabi seasons is likely to be way below projections due to deficient rains coupled with infestation of fall armyworm in the standing crop in Karnataka, Maharashtra, Tamil Nadu and Andhra Pradesh. 

Though the extent of damage is not clear as yet, the situation will keep prices higher through the marketing year.

"Around 50% of the sown (rabi) maize crop in Karnataka is feared to be damaged due to infestation," said C.P. Mallapur, professor at University of Agricultural Sciences, Dharwad in Karnataka.

In reply to a question in the Rajya Sabha, Minister of State for Agriculture Purushottam Rupala recently said around 85,000 ha under maize crop across the country was hit by fall armyworm, of which Karnataka alone accounted for 81,000 ha.

Warehousing major National Bulk Handling Corp has forecast kharif maize output at 18.3 mln tn, way below the government's estimate of 21 mln tn due to "highly erratic" monsoon rains. 

Drought or drought-like situation developing since September in Karnataka, Maharashtra, parts of Andhra Pradesh, and Telangana is expected to hit yields.

Southwest monsoon rains in Maharashtra were 8% below normal, while in Karnataka they were 6% below normal. Scanty rains since late August in most maize growing regions have led to poor soil moisture during the sowing period, hitting yields.

Fear of a smaller crop and a fall in arrivals will push prices, going ahead.

"Prices are likely to rise by January end as arrivals will fall significantly…A lag in rabi sowing both in Andhra Pradesh and Karnataka will also support prices," Davangere-based grains trader Shiv Kumar said.

"Maize prices will remain bullish due to fear of a smaller crop because of water stress in major growing states and worm infestations," said Chandra Kant Patil, trader at Maharashtra Krishi Kendra trading company.

As of last week, farmers had sown rabi maize across 1.2 mln ha, down 11.4% on year, according to data from farm ministry.

"The rabi acreage will settle 15-20% lower from last year, thereby leading to a decline in production," said Hanish Sinha, research head at National Bulk Handling Corp.

Sinha has forecast India's rabi maize output at 4.0-4.5 mln tn, the lowest since 2009-10, and much lower than the target of 7.5 mln tn set by the government.

"Maize is largely a drought-tolerant crop but the crop sown during October and November has been affected due to water stress. It is too early to provide any estimate. However, it will be less than what the government estimates," Bihar-based agricultural scientist D.K. Choudhary said.

With trade prospects also bleak given an import duty as high as 60%, domestic supply is likely to remain under pressure, paving the way for prices to tread higher.  End

Edited by Madhumita Sen Choudhury

 

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