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Pakistan emerging serious competitor to India in world Maize market

"Pakistan emerging serious competitor to India in world Maize market"

Pakistan is emerging as a serious competitor to India in the world Maize (corn) market, providing its output at a price that is over $20 a tonne lower than India’s, particularly in South-East Asia.

‘Pakistan is selling maize in Ho Chi Minh, Vietnam, for $282 (₹20,675) a tonne, cost and freight included. This is cheaper than any Indian trader’s price,’ claimed a New Delhi-based trading source who spoke on the condition of anonymity.

Pakistani businessmen are making the offer, according to the source, as the neighbouring country plans to export at least one million tonnes (mt) of maize this year.

Also Read: Pakistan may allow imports of cotton from India to re-establish bilateral trade

India is increasing its supply

The Pakistan offer comes as Indian Maize exporters ramp up supply in response to a rise in coarse cereal prices. According to Reuters, Indian exporters have secured commitments to send four lakh tonnes of maize to animal feed producers in Malaysia, Vietnam, Sri Lanka, and Bangladesh during this month and July, citing Singapore-based feed grain traders.

Maize futures are currently trading at $6.59 a bushel (₹19,000 per tonne) on the Chicago Board of Trade. Maize prices have risen this year as a result of China’s massive demand, robust US sales, and Brazil’s transportation issues. Since the beginning of the year, the cereal has increased by more than 35%.

According to M Madan Prakash, President of the Agri Commodities Exporters Association. ‘We are selling maize to South-East Asia for $305 per tonne (₹22,350).  However, demand has slowed for a variety of reasons,’ ‘The second wave of Covid has impacted buying from Southeast Asia,’ he said, adding that exports from Pakistan may have slowed as well.

Other possibilities

In comparison to India and Pakistan, Brazil is supplying Maize for $295 (₹21,625) and the United States at $306 (₹22,425) a tonne FOB, up 63 percent and 90 percent, respectively, from a year ago.

Last fiscal year, India’s Maize exports reached a six-year high, with over 2.5 million tonnes going to Bangladesh, Nepal, and Southeast Asia. India continues to export a substantial amount of Maize, partly because the Covid epidemic has impacted the poultry industry, which is the primary user of the crop for feed.

Maize prices have remained below the minimum support price (MSP) of ₹1,850 per quintal due to weak domestic demand. This year’s high production of 30.24 million tonnes adds to the downward pressure on prices, although exports have kept them close to the MSP.

In different sections of the country, rates are hovering between ₹1,400 and ₹1,750. The MSP for the coming season was raised to ₹1,880 a quintal by the Centre last week.

The fourth most important crop

Pakistan has established itself as a genuine challenger in the global maize market, with production rising 7.38 percent to 8.47 million tonnes this year. After wheat, rice, and cotton, Maize is the fourth most important crop farmed in the neighbouring country.

Maize exports to the far East from the subcontinent would remain good until next year, according to S Chandrasekaran, a New Delhi-based trade researcher, since Brazil continues to have shipment challenges due to Covid. The situation has also been complicated by China’s large acquisitions, as well as hefty freight costs.

Also Read: India to export 3.5-4 mt of wheat until March 2021 if export subsidy extends

Pakistan could become a big competitor in the Maize market in the future, according to Chandrasekaran, as its growers transition away from Basmati rice and toward non-Basmati rice and other crops like Maize.

Pakistan has an advantage

‘Using machine cutters is an advantage of cultivating non-Basmati paddy or other crops like maize. Farmers in Pakistan, unlike in India, have vast land holdings since there is no limit on the quantity of land a farmer may own,’ he stated.

Because of Pakistan’s large farms, growers practice corporate-style agriculture, bringing mechanisation to better use.

In its study ‘Grain: World Market and Trade,’ the US Department of Agriculture predicted that India’s Maize exports will fall by six lakh tonnes this fiscal year, after Bangladesh’s three lakh-tonne cut and Vietnam’s 60,000-tonne decline.