In the worldwide maize (corn) market, Pakistan has emerged as a formidable rival to India, delivering the coarse cereal at a lower price in South-East Asia.
Exporters, on the other hand, believe the trend will be short-lived because the neighboring country has limited stockpiles and is dealing with a number of challenges.
As a result of Pakistan’s decreased maize pricing, a few purchasers in South-East Asia, mainly Vietnam, are attempting to outwit Indian suppliers by bargaining after ships arrive.
Shipments are being held up
‘Right now, demand for Indian maize is low because Pakistan is giving it at a lower price.’ As a result, two-thirds of our consignments are being held up in Vietnam, and purchasers are bartering for a lower price,’ said M Madan Prakash, President of the Agricultural Commodities Exporters Association (ACEA). His company, Rajathi Group, exports agricultural products like maize, rice, and onions.
‘Pakistan is currently dealing with a number of difficulties. This year, India boasts a bountiful maize crop. ‘The situation is expected to improve as new contracts are signed by Indian exporters to South-East Asia and Gulf nations,’ said Mukesh Singh, Managing Director of Mumbai-based MuBala Agro Commodities Pvt Ltd.
‘Pakistan benefits from its currency’s depreciation against the US dollar.’ But, it has limited numbers and is only targeting South-East Asia,’ said Rajesh Paharia Jain, a New Delhi-based exporter.
A lack of government assistance
According to a trade analyst in Delhi, Indian exporters cannot help with such buyer behavior, even though such cases are rare.
‘But, there are issues. No one is issuing letters of credit (LCs) to facilitate trade with Pakistan. ‘Furthermore, container availability is an issue,’ he added.
According to Prakash, Indian maize is being offered for $307-15 per tonne, while Pakistani maize is being sold at $293-95 cost and freight. According to Jain, Pakistan is offering its produce for $280 free-on-board (f.o.b), whereas India is requesting $295 f.o.b.
‘India should be able to reclaim the advantage, primarily through lower east coast freight rates.’ Our maize, on the other hand, is hampered by a flat Indian currency and a lack of government support, in addition to greater handling and storage costs,’ Jain explained.
Prices in some mandis are lower than the MSP
‘We don’t have any supply issues.’ While prices have cooled little, we are receiving corn delivered for ₹24,000 per tonne in Chennai,’ added Prakash.
The median price (rates at which most trades take place) of maize at Davangere in Karnataka is ₹2,017 per quintal, according to data from Agmarknet, a subsidiary of the Agricultural Ministry, down ₹150 since last month.
This crop year’s minimum support price (MSP) for maize is ₹1,962. Prices have fallen below the MSP in some Maharashtra marketplaces.
Corn futures on the Chicago Board of Trade (CBOT) are trading at a one-month high of $6.5 per bushel ($255.89 per tonne) due to robust demand.
According to Jain, the quality of Indian maize is superior, but it is unable to gain since it is desired for feed rather than human use.
MuBala’s Singh stated that he has had orders from Oman and Saudi Arabia, but in lesser lots of 5,000 tonnes. Vietnam and Malaysia were also buying in large quantities.
Demand is expected to be high
But, issues have arisen with shipments to Bangladesh, the major importer of Indian maize, because Indian LCs are not being honored.
According to the analyst, demand for Indian corn will remain strong in light of agricultural concerns in the United States.
‘There is uncertainty about supplies from the United States.’ In addition, supplies from Ukraine are in doubt. ‘Maize demand remains strong, and India stands to benefit,’ he said.
A record high maize yield of 34.61 million tonnes (mt) is expected to help meet export requests.
According to data from the Agricultural and Processed Food Products Export Development Authority (APEDA), maize exports were 2.86 million tons valued at $931 million during the April-January period of the 2022-23 fiscal year, with Bangladesh accounting for 1.5 million tons and Vietnam accounting for 0.57 million tons. Maize exports totaled 3.69 million tonnes ($1.02 billion) in 2021-22.