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Traders say maize imports under tariff rate quota unlikely in FY21

Wednesday, Jul 22, 2020

 

By Sampad Nandy

 

NEW DELHI – India is unlikely to import maize under the tariff rate quota in the current financial year as the landed cost may be higher than spot prices, despite a far lower duty, most market participants believe.

 

The government, in June, had allowed the import of 500,000 tn feed-grade maize at a concessional duty of 15% under the tariff rate quota for 2020-21 (Apr-Mar). Usually, maize imports attract a duty of 60%. 

 

According to trade estimates, currently, the export price of maize from the Ukraine is around $180-$190 per tn, free on board. At this price and with the concessional duty, the importer will have to pay 15,000-16,500 rupees per tn to buy maize. After adding freight charges to the landed cost, the mill-gate price may easily top 18,000 rupees per tn. 

 

"This landed price is higher than the current spot prices. Maize prices are seen to weaken further due to a sharp decline in demand and availability of stocks," an official with a multi-national trading firm said. 

 

Currently, maize prices are at 13,000-13,500 rupees per tn at key spot markets. The prices are likely to decline in the next few months as demand is seen weak, said Sehdev Jaiswal, a trader based in Purnea, Bihar. 

 

The move to allow imports at lower prices was a surprise, which had further softened already weak prices. Maize prices have fallen over 30% since March on account of a fall in demand as consumption of poultry products was hit, traders said.

 

Rumours on social media that poultry products could be carriers of the coronavirus have led to a sharp fall in demand for broilers and eggs, and is seen hitting the prices of maize, a key component of poultry feed, an official with a domestic poultry firm said.

 

A sharp rise in acreage of kharif crop across major states and above-normal rainfall is also seen hitting domestic prices of the coarse grain, an official with a major domestic grains trading firm said. 

 

The area under kharif maize was over 10% higher on year at 6.43 mln ha as of last week, the latest data from the farm ministry showed. 

 

So far, acreage of the crop has been sharply higher on year in Madhya Pradesh, Maharashtra, Jharkhand, Uttar Pradesh, and Karnataka. The rise can be attributed to excess monsoon rains over central India.

 

The expectations of good monsoon rains this year is also lending support to the anticipation of a higher output this year, the official with the domestic firm said. 

 

So far, rainfall has been 7% above normal at 380.2 mm, according to the India Meteorological Department. The weather bureau expects a normal monsoon this year with rainfall seen at 102% of the long-period average. 

 

"With prices of the commodity seen weakening further in the coming days imports at higher prices are not an alternative," the official with the multi-national firm said. 

 

India usually imports around 1 mln tn maize annually to meet its consumption of around 25-26 mln tn. In 2019-20 (Jul-Jun), most industry participants estimated production at 23-24 mln tn, up from 19-20 mln tn the previous year.


The government had pegged maize output in 2019-20 at 28.1 mln tn, nearly 4% higher from the previous year.  End

 

US$1 = 74.76 rupees

 

Edited by Aditya Sakorkar

 

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