Traditionally exporting between 250,000 to 300,000 metric tons of corn each month, India witnessed a sharp decline in December, with exports dwindling to around 30,000 tons.
India’s corn exports have nearly come to a standstill since December, driven by a surge in local prices fuelled by increased demand from poultry and ethanol industries, as reported by Reuters.
Traditionally exporting between 250,000 to 300,000 metric tons of corn each month, India witnessed a sharp decline in December, with exports dwindling to around 30,000 tons, according to industry insiders mentioned in the report.
Typical buyers from India, including Bangladesh, Vietnam, Malaysia, Nepal, and Sri Lanka, have shifted their preferences towards South American countries, which offer corn at a considerable discount compared to Indian prices.
Nitin Gupta, Senior Vice President of Olam Agri India, said in the report: “India’s corn exports have nearly stopped,” attributing it to strong local demand for corn from poultry and ethanol manufacturers, which has effectively kept corn prices firm.
Indian corn is currently priced at around $300 per metric ton on a free-on-board (FOB) basis, while South American corn is being offered at approximately $230, creating a significant price gap.
A Mumbai-based dealer noted, “A very small amount is currently going to neighbouring Nepal, Bhutan, and Bangladesh. The Southeast Asian countries have completely stopped buying from India.”
Dealers estimate that India’s corn exports for 2023 plummeted to approximately 2.3 million tons from 3.5 million tons in 2022.
The surge in domestic demand can be traced back to the government’s recent decision to increase the procurement price of ethanol made from corn by 8.8 per cent, reaching 71.86 rupees ($0.864) per litre.
This move, combined with restrictions on sugar diversion for ethanol production, has stimulated higher demand for corn.
Hemant Jain, an exporter in Indore, explained in the report, “Corn prices have gone up by around 1,500 rupees per ton after the government raised the procurement price for ethanol made from corn.”
Despite the government’s forecast of summer season corn production for 2023/24 at 22.5 million tons, traders suspect that the actual production may fall short due to drought conditions.
A New Delhi-based trader remarked, “Corn production, even from the winter crop, is not promising. It seems corn prices will remain elevated until September when the next season’s summer crop supplies are expected to start.”
The soaring corn prices have prompted the poultry industry, a major consumer of corn, to request duty-free imports.
However, Trade Minister Piyush Goyal clarified on Saturday that there were no immediate plans to allow duty-free imports.
Source: India Today
