Maize gets a high on crop loss in US, drop in output at home
Nov 25 2012 , New Delhi
Global corn output down 4.6%, India’s kharif production may fall 8%
Maize prices follow a seasonality pattern, wherein prices decline sharply with the commencement of harvesting in September and then start gaining with the drop in supplies November onwards. Harvesting of kharif maize is over and, thus, supplies have started declining. On the other hand, demand is strong and exports are expected to remain firm this season amid lower corn output in top producing nation, US.
At NCDEX, maize December futures have recovered from their lows of Rs 1,271 per quintal to touch a high of Rs 1,484 per quintal, gaining almost 17 per cent. However, in the spot market prices have gained by 11 per cent since the beginning of November to rule at Rs 1,405 a quintal level.
Spot prices remained unchanged in the Nizamabad market on Saturday at Rs 1,400 a quintal with just 800 quintal and arrival. In Davangere market, the prices were unaltered at Rs 1,305 a quintal and arrivals were at 3,600 quintals. In Sangli market, maize prices surged by Rs 80 a quintal to Rs 1,475-1,500 and arrivals were at 5,000 quintals.
According to the first advance estimates for 2012-13, kharif maize area this season stood at 73.68 lakh hectares compared with 73.88 lakh hectares last year. Kharif maize production is pegged at 14.8 million tonnes, down eight per cent from the previous year. Maize is sown in both kharif and rabi seasons; with the kharif season output comprising 75 per cent in total production. Higher rabi maize output may to some extent offset the losses of kharif crop.
On the trade front, India is not a major player in the world maize market as the country’s production is just about enough to meet domestic consumption, leaving very little for exports. However this year, due to a drop in output in the US, the largest producer and exporter of this cereal crop, Indian exporters have an opportunity to export more. At present, Indian maize prices are attractive compared with US corn prices. But they are facing stiff competition from Argentina and Brazil.
In its November monthly crop report, the US department of agriculture (USDA) has revised corn output estimates marginally upward and thus CBOT wheat prices have seen some correction over the past few weeks. However, the output still remains 13 per cent lower than last year’s. US corn production for 2012-13 is forecast at 273 million tonnes, lower than 313 million tonnes in 2011-12 and the lowest since 2006-07.
Global corn production is estimated down by 4.6 per cent to 839 million tonnes in 2012-13 from 880 million tonnes in the previous year. Global ending stocks of corn are estimated to decline by 10 per cent in 2012-13 to 117.9 million tonnes.
“Following the seasonality pattern, maize prices have gained significantly with a drop in supplies since November. Thus, some correction in the prices is expected from the present level as demand will remain subdued at higher levels,” said Vedika Narvekar, a senior research analyst for agri commodities at Angel Broking.
However, prices may again recover in the short to medium term as lower output estimates and expected higher demand will keep the positive market sentiments intact, she added.
“Technically, maize prices may find strong support at Rs 1,280 and resistance at Rs 1,640 per quintal levels,” Narvekar said.
According to Emkay Commodity Research report, NCDEX maize December futures prices settled at Rs 1,501 on Saturday, up 1.28 per cent from previous Friday’s close. The next possible resistance may be around Rs 1,512. Support is at Rs 1,453 levels and next support is at Rs 1,424 levels, the report said. zz