In 2023, Brazil experienced a historic surge in corn exports, reaching 55.89 million tons, with China emerging as a primary importer. The global corn imports shifted, and Conab’s report revised soybean and corn harvest forecasts due to adverse weather.
The Current Scenario
The global corn market is experiencing a challenging phase, facing the dual pressures of surplus production and weakened demand. Industry experts and analysts predict a dip in corn prices, already at a three-year low, with potential implications for various sectors, including Indian poultry and starch manufacturers eyeing imports due to rising domestic rates.
Weather Impacts In Corn Production
Corn March contracts on the Chicago Board of Trade (CBOT) highlight a three-year low. The weighted average price in India exceeds, surpassing the minimum support price (MSP). The price surge is attributed to the increased use of maize for ethanol production following a deficient monsoon affecting sugarcane output.
Import Challenges and Solutions
The poultry and starch industries in India seek duty-free imports. Still, the government might not comply, as a concessional duty of 15 percent is available for importing five lakh tonnes of corn under the tariff quota regime.
Regional Impacts and Risks
Projections of large harvests in Argentina and Brazil continue to dampen market sentiment, with China anticipated to harvest a record volume in 2023-24. However, agencies warn of short-term upside risks due to El Nino and potential regional escalations, such as the Israel-Hamas conflict, impacting oil prices and stimulating biofuel demand.
Conclusion
The increasing corn-based ethanol production in Brazil poses a longer-term risk to the price outlook, as it is expected to account for a growing share of new production capacities.