Trade sentiments have been positive in the domestic cash markets since past couple of months. But the upside was limited in the month of June because of falling futures prices, in light of monsoons showing a recovery, beneficial for Kharif crops including Maize. The domestic market found support in July, due to steady demand from feed manufacturers’ as well as poultry industry.
India also exports maize, although in small quantities. The country had exported around 8763 tons of maize mainly to Malaysia and Nepal July 13 and July 19th as per IBIS data. The Cabinet Committee on Economic Affairs has given its approval last to last month to increase maize MSP by Rs. 15 per quintal to Rs. 1325 per quintal for the 2015-16 Kharif season.
Maize planting is almost complete in A.P, and the crop area might remain unchanged over last year. However, low rainfall can affect the crop yield. Maize stocks in Nizamabad could be around 24,000 tons, which includes around 19000-20000 tons with Government, and approximately 4000-5000 tons with private traders. In A.P, stock of maize could be around 160,000 tons (Roughly one lakh held with Government of India and 20,000 amongst private traders). Current weather conditions in the state are favorable, and if the producing regions experience good weather in August then it can have a positive impact over the yield.
In Karnataka, maize sowing is over as per official sources. Traders from the state have reported that growers have given up nearly 4-5% of cotton area towards maize. Around 60-65% of maize sowing is over in the state of Karnataka till July 20th, and going by traders’ estimates, the inventory held by private stockist and local farmers are between 5 and 5.5 lakh quintals. Weather conditions in Rajasthan are favorable and the crop yield can improve versus last year, subject to climatic conditions supporting the growth phase(for a longer duration). In Delhi, available stocks are estimated between 4000-5000 tons.
The latest Government data has stated that planting of all Kharif coarse cereals have increased marginally versus normal of the corresponding week to 13.6 million hectares. However, the seeding acreage of these crops was almost 33 per cent higher, and nearly 60-65 per cent higher year on year. There has been a substantial increase in planting of Kharif maize, going by the trade talks.
The USDA in a February release had estimated MY 2014/15 exports to drop to 2 MMT on relatively weak export demand under this situation, India will be observing exports after four consecutive years of bumper overseas trade. The agency has projected in India’s MY 2015/16 trade at 2.0 MMT in February, on expectations of less competitive pricing versus other major exporters. As per the USDA, India’s ability to ship corn in small quantities (containers) is a key factor for regional buyers like Bangladesh, Nepal, Sri Lanka, and other markets like Indonesia. India occasionally exports small quantities of sorghum and barley, largely to neighboring countries and the Middle East.
For the 2014-15 marketing year, India’s maize production might be somewhere between 20 and 21 million tons, while domestic consumption is expected around 19.00-19.50 million ton, which includes exports. The country might export around 1.8-2.0 million tonnes, which would be lower than last year’s figure of approximately 4 million tons. Carry forward stock on the other hand is expected to be 1.50-2.0million tons roughly.
Summing up, sowing figures are seen higher versus previous year, but there is a consistent requirement from poultry feed manufacturer and starch millers. Also, the Rabi season arrival pressure is decreasing gradually. Therefore spot prices at major markets of India are expected to remain firm unless the Kharif harvesting season begins.
Abhijeet Banerjee, Religare Commodities
