Pakistan has emerged as a strong competitor to India in the global corn (maize) market, offering its produce at over $20 a tonne cheaper than India in the global market, especially South-East Asia.
“Pakistan is offering corn at $282 (₹20,675) a tonne, cost and freight, Ho Chi Minh in Vietnam. This is lower than the price quoted by any Indian trader,” said a New Delhi-based trading source, speaking on condition of anonymity.
The source said Pakistan traders were making the offer as the neighbouring country looks to export at least one million tonnes (mt) of corn this year.
India steps up supply
The Pakistan offer comes at a time when Indian corn exporters have stepped up supply amidst a rally in the coarse cereal prices. Last week, Reuters, quoting Singapore-based feed grain traders, reported that Indian exporters have signed deals to ship four lakh tonnes of corn to animal feed producers in Malaysia, Vietnam, Sri Lanka and Bangladesh during this month and July.
Currently, corn futures are quoted at $6.59 a bushel (₹19,000 a tonne) on Chicago Board of Trade. China’s huge appetite, strong US sales and Brazil shipping woes have all lifted corn prices this year. The cereal has gained over 35 per cent since the beginning of this year.
“We are offering corn to South-East Asia at $305 (₹22,350) a tonne. But demand has slowed due to quite a few reasons,” said M Madan Prakash, Agri Commodities’ Exporters Association President.
“The second wave of Covid has affected buying from South-East Asia,” he said but added that exports could have slowed on Pakistan offers too.
Other offers
Compared with India and Pakistan, Brazil is offering corn at $295 (₹21,625) and US at $306 (₹22,425) a tonne free-on-board (FOB) with prices increasing by 63 per cent and 90 per cent, respectively, from a year ago.
India’s corn exports hit a six-year high last fiscal with over 2.5 million tonnes being shipped out of the country, mainly to Bangladesh, Nepal and South-East Asia. India continues to export a significant quantity of corn primarily since the poultry sector, the major consumer of the cereal for feed purpose, has been affected by the Covid pandemic.
In view of subdued domestic demand, corn prices continue to rule below the minimum support price (MSP) of ₹1,850 a quintal. A record 30.24 million tonnes of production this year too added to the pressure on prices but exports have helped them hover near the MSP.
Rates are hovering between ₹1,400 and ₹1,750 across various parts of the country. Last week, the Centre raised the MSP for the next season to ₹1,880 a quintal.
Fourth important crop
Pakistan has emerged a serious contender in the global corn market on the heels of its production increasing 7.38 per cent this year to 8.47 million tonnes. Corn is the fourth-most important crop grown in the neighbouring nation after wheat, rice and cotton.
S Chandrasekaran, a New Delhi-based trade analyst, said that corn exports to the far-East would continue to be good from the subcontinent until next year as Brazil continues to face shipment problems in view of Covid. China’s huge purchases, too, have made the situation difficult along with high freight charges.
Chandrasekaran said that Pakistan could become a serious competitor in the corn market in the future, as its growers look to shift from cultivating Basmati rice to non-Basmati rice and other crops such as corn.
Pakistan advantage
“The advantage of growing non-Basmati paddy or other crops such as maize is that you can use machine cutters. Unlike India, farmers in Pakistan have huge land holdings since there is no cap on the amount of land a farmer can own there,” he said.
The huge farms in Pakistan means that growers follow corporate-style farming, particularly putting mechanisation to better use.
The US Department of Agriculture, in its report “Grain: World Market and Trade”, projected India’s corn exports to drop by six lakh tonnes this fiscal on the heels of Bangladesh cutting its imports by three lakh tonnes and Vietnam by 60,000 tonnes.
Source : The Hindu Businessline
