Global maize price spike holds domestic rate stable despite bird flu impact on poultry sector

Representative image | Source: Unsplash

A nearly eight percent rise in maize prices in the global market since the beginning of 2021 has helped domestic prices stabilise despite the poultry industry, the primary consuming sector, being hit by avian influenza outbreak across India.

According to Trading Economics website, maize (corn) prices have increased to 520.25 US cents a bushel year-to-date. The commodity’s rise month-on-month is 18.30 percent.

The International Grains Council said maize prices free-on-board (FOB) were quoted from USD 256 (Rs 18,700) in the US Gulf to USD 263 (Rs 19,200) in Argentina, a tad lower than last week.

The US Department of Agriculture (USDA) said rising soybean prices had pushed up corn prices while supply concerns in South America have added further fuel.

Argentina, the third-largest maize exporter in the world, capping corn exports till March 1, 2021, at 30,000 tonnes a day to ensure supply of maize for the domestic poultry also led to the price surge in the global market.

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Subramani Mancombu

Journalist|Independent Journalist

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“Maize prices have gained over Rs 100 a quintal in the last fortnight or so. Rates for maize delivered at Namakkal in Tamil Nadu are currently Rs 1,570 a quintal. Last week, they were ruling at Rs 1,600,” said Tamil Nadu Egg Poultry Farmers Marketing Society (PFMS) president Vangili Subramanian.

According to Ministry of Agriculture data, maize prices in Andhra Pradesh, Karnataka, Telangana, Tamil Nadu and parts of Maharashtra are ruling between Rs 1,150 and Rs 1,400 currently.

This is against the minimum support price of Rs 1,850 a quintal fixed by the Union Government for the current crop year (July 2020-June 2020).

“Maize ex-Nashik is quoted at Rs 1,390 a quintal and Mumbai-delivered is Rs 1,510,” said Chennai-based Rajathi Group Director Madan Prakash.

“Prices have tended to rise over the last two days,” he said.

“Maize prices in India have been ruling stable. Prices have not increased in tune with the global spike in view of the spread of Avian influenza or bird flu across the country. But they may not drop from current levels,” said Bimal Bengani, Managing Director, Bengani Food Products Pvt, an export house.

Domestic consumers have ample stocks and hence local demand was slow. “Everyone is looking towards the Rabi crop harvest due in April,” he said.

Prices could increase next month or in March, the Bengani Food Products MD said.

At least 11 States have been affected by the bird flu outbreak in India leading to culling of thousands of poultry birds. The outbreak has affected consumption of poultry products such as egg and meat to some extent.

The culling of birds has resulted in offtake of raw materials such as maize declining. However, the rise in global prices has resulted in Indian maize turning competitive in the export market.

“We are witnessing some demand and buyers abroad say it will continue till April-May until the Brazil crop arrives. After May, Indian maize may not be competitive in the global market as domestic prices generally tend to rise after May,” said Prakash, whose Rajathi Group exports agricultural commodities.

Bimal Bengani said the rise in global prices has halted during the last couple of sessions, particularly after prices increased from $190 to $260 a tonne.

Also, Bangladesh, which had bought over seven lakh tonnes till November, has stopped buying from India. “Bangladesh maize harvest begins in March. So, it is off the market now. But we are shipping out pending orders,” he said.

While Prakash said that Vietnam and Malaysia were currently buying maize from India, Bimal Bengani said Sri Lanka was also importing from here.

According to the Agricultural and Processed Food Products Export Development Authority, maize exports have already topped the shipments for the whole of the last fiscal.

During the April-October period of the current fiscal, 11.5 lakh tonnes of maize valued at $234.5 million (Rs 1,713.65 crore) against 3.7 lakh tonnes worth $142.78 million (Rs 1,042 crore) the whole of previous fiscal.

This is the highest volume of exports in a fiscal year since 2014-15 when India exported 28.25 lakh tonnes of maize. The next best was during 2018-19 when 10.51 lakh tonnes were shipped out.

Bimal Bengani said if global prices rise further, then export demand will continue. Prakash said India could export a good volume of maize further.

Since domestic consumption had dropped in view of the avian influenza, exporters say production in the country could meet export and domestic demand.

Last year, the domestic industry had to pay Rs 2,600 a quintal for maize on supply shortage. It led to imports of 3.18 lakh tonnes of maize under the tariff rate quota (TRQ).

India allows import of up to five lakh tonnes of maize under TRQ at a lower Customs duty of 15 percent against the normal 50 percent.

This crop year, the Agriculture Ministry’s first advance estimate of production of foodgrains for kharif maize has pegged the crop at 19.88 million tonnes compared with 19.68 million tonnes during last year's kharif season.

(Subramani Ra Mancombu is a journalist based in Chennai, who writes on topics in commodities and agriculture)