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Effect of Russia’s Invasion of Ukraine on Maize Export and Price Buyers are switching to the alternate sources

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Yellow corn prices are moving up on demand from West, South, and South-East Asia. Customers abroad are switching over entirely to broken rice for animal feed in Vietnam, Indonesia, and China. 

“There is always massive demand for maize from Bangladesh, Vietnam, Indonesia besides the Gulf. But prices have surged, and availability is low since the new crop will arrive only after next month,” said Bimal Bengani, Managing Director of Kolkata-based Bengani Export Pvt Ltd. 

A major reason for domestic maize prices increasing is that the kharif crop has almost got exhausted. Singh said maize is currently quoted at $ 0,29-0,07 a kg. Demand for maize has increased as supplies from Ukraine, which contributes 16 percent of global exports, have been cut off, with shipments from the Black Sea. 

According to the International Grains Council (IGC), Argentina quoted $329 a tonne last weekend, while Brazil offered maize at $364 and the US at $363 (f.o.b) free on board. Currently, the Chicago Board of Trade benchmark corn futures is ruling at $7,44 a bushel ($292.83 a tonne).

Some Indian exporters expect prices to increase to $420-430 and are holding off the goods. 

Maize is one of the agricultural products whose exports have been good this fiscal, increasing by over 30 percent in the first ten months. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), the export of other cereals, in which maize plays a major part, was 3,16 million tonnes (mt) valued at $1,74 billion during April-January this fiscal against 2,37 mt valued at $527 million in the year-ago period.

MuBala’s Singh said maize exports were feasible as long as prices were around $0,22-0,11 a kg in the domestic market. Until December, Bangladesh was the top buyer purchasing 1,25 mt, while Vietnam purchased 0,95 mt. “In view of the high prices, there is good demand for 100 percent broken non-sortex rice commanding a higher price,” said Prakash. The non-sortex rice will have yellow and black coloured grains.

“Even broken rice prices are now quoted near maize prices as there is a shortage; as per IGC data, 25 percent broken rice price last weekend was $349 a tonne. 

According to APEDA data, China, which began importing Indian rice in the last fiscal after over three decades, bought 1,1 mt of rice during the April-December period and Vietnam 0,6 mt. In October, the US Department of Agriculture said broken rice accounted for 97 percent of India’s rice exports to China from January-August last year. 

“Broken rice has always been going to China and Vietnam over the last couple of years. This year, there is a shortage now,” Sagar said. “Exports of broken rice could also be a problem given the surge in price. We could manage when prices ruled at around $21,11-9,23” he said, adding that the issue now was the grain’s availability. 

After corn prices surged last fiscal, China began buying broken rice from India to use it as feed. Also, Beijing is required to build feed inventories as part of its plans to increase the production of pigs. Singh said it takes time to accumulate broken rice quantity for exports as they are done in bulk. Most of the broken rice was heading from the east coast ports such as Kakinada and Kolkata to Vietnam and Indonesia. 

“Maize prices will begin to decline once the rabi crop beings,” 

“Rice prices will begin tapering off once Rabi arrivals begin. This will happen around mid-May,”

“It is a favorable situation for India after the Russian-Ukraine crisis. As India has a freight advantage of $70-80 a tonne and Chinese demand is up. India’s maize export share to China might improve. 

Source: The Hindu Business

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