Maize exports set to crash in ’08

Maize exports set to crash in ’08

New Delhi: India’s maize exports are set to crash to 200,000 tonnes in 2008-09 from 3 million tonnes (mt) as a three-month export ban and more attractive shipments from Brazil after its currency weakened hit demand, a top exporter said.

“All Asian buyers, except China and Thailand, which were buying from us have now turned to Brazil, Argentina and even the US due to falling freight," Amit Takkar, assistant vice-president of Adani Enterprises Ltd, said on Tuesday.

Exports to Malaysia, Indonesia, Vietnam, Japan and South Korea had risen sharply, as high freight costs made purchases from the US and South America costly, he said in an interview.

Adani is India’s biggest private exporter of farm goods.

Capitalizing on an earlier sharp upturn in freight rates, India captured 3% of the global maize trade of 100mt in 2007-08.

But Takkar said the availability of cheaper transport had reduced the South Asian nation’s cost advantage.

Along with substantially lower exports, falling prices and slowing demand from poultry owners at home would hurt farmers unless government agencies bought large quantities, he said.

“When buyers can get maize at $190-195 (Rs9,443-9,691.5) per tonne, why will they come to India, which will not be able to sell below $200 free-on-board," Takkar said.

Brazil’s currency real has seen sharper falls than the rupee, he added, increasing to the allure of Brazilian exports.

The government in July banned exports of maize until 15 October to ensure sufficient supplies, as part of a string of measures taken to counter rising food prices.

Traders in Nizamabad, the hub of the domestic maize trade, in Andhra Pradesh said the export ban hurt India’s image.

“Although our supplies had reached even Japan last year, India is not being viewed as a long-term supplier due to the changes in export policies," Takkar said.

Analysts say a 33% rise in the price the government is paying farmers for this season’s maize has pushed up spot prices, making purchases by poultry firms unviable.

“Industry is not able to absorb that. I see market turning very, very bearish," Takkar said.

Traders said poultry firms which used to pay immediately now take 75 days to clear their dues, reflecting poor demand for their products.