India’s corn exports plunge as local prices rally on strong demand

India’s corn exports have almost ground to a halt since December due to a rally in local prices on strong demand from the poultry and ethanol industry, making shipments from the country more expensive than those from rivals, four exporters told Reuters.

India usually exports around 250,000 to 300,000 metric tons of corn every month but in December its exports fell to around 30,000 tons, dealers said.

Typical buyers from India such as Bangladesh, Vietnam, Malaysia, Nepal and Sri Lanka have preferred purchases from South American countries that are offering the grain at a steep discount to Indian prices.

“India’s corn exports have nearly stopped,” said Nitin Gupta, senior vice president of Olam Agri India.

“In the local market, demand is robust for corn from poultry and ethanol makers, which is keeping corn prices firm.”

Indian corn is offered around $300 per metric ton on a free-on-board (FOB) basis, while competing South American corn is being offered around $230, dealers said.

“A very small amount is currently going to neighbouring Nepal, Bhutan and Bangladesh. The Southeast Asian countries have completely stopped buying from India,” said a Mumbai-based dealer with a global trade house.

India’s 2023 corn exports fell to around 2.3 million tons from 3.5 million tons in 2022, dealers estimate.

Domestic demand for corn suddenly rose after India earlier this month hiked the procurement price of ethanol made from corn by 8.8% to 71.86 rupees ($0.864) a litre and capped ethanol production by diverting sugar.

“Corn prices have gone up by around 1,500 rupees per ton after government raised procurement price for ethanol made from corn,” said Hemant Jain, an exporter in Indore in the central state of Madhya Pradesh.

The government has forecast summer season corn production in 2023/24 at 22.5 million tons, but traders estimate production was much lower than the forecast because of the drought.

“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,” said a New-Delhi-based trader.

Elevated corn prices even prompted the poultry industry, the biggest corn consumer, to request the Indian government to allow duty-free imports of the grain, also known as maize.

But Trade Minister Piyush Goyal on Saturday said there were no immediate plans to allow duty-free imports.

Tags: exports, corn, prices, India, demand