Corn Prices in India are on a Constant Hike; Exports Facing a Dip as a Result
Indian corn prices have been surging over the past few months, as per Procurement Resource. This surge in prices has rendered Indian corn exports less competitive globally, especially compared to offerings from South American nations.
Major importers of Indian corn, including countries like Bangladesh, Vietnam, Malaysia, Nepal, and Sri Lanka, have shifted their preferences towards cheaper South American corn. Procurement Resource reported a consecutive monthly decline in corn prices. The decrease from December 2023 to January 2024 was approximately 2.12%, and from January 2024 to February 2024, it was about 6.05%.
India's corn exports have seen a significant decline since December, with a sharp drop in export volumes attributed to rising local prices fueled by strong demand from the poultry and ethanol industries. In December, India witnessed a dramatic plunge in its corn exports, with the volume decreasing by nearly 90% from its traditional monthly average. This significant drop underscores a stark departure from the norm, highlighting the challenges faced by the Indian corn export sector amidst surging local prices and increased global competition.
The increased local demand for corn, primarily driven by the poultry sector and ethanol production, has kept domestic prices robust. India's pricing of corn for export on a free-on-board basis is notably higher than that of South American corn, further diminishing its attractiveness to traditional and potential new buyers. Consequently, India's corn exports have dwindled, with only minimal quantities reaching nearby nations like Nepal, Bhutan, and Bangladesh, while Southeast Asian countries have ceased their purchases from India altogether.
A significant factor contributing to the domestic price surge is the Indian government's recent initiative to increase the procurement price of ethanol produced from corn alongside a cap on ethanol production from sugar. This policy adjustment has led to a rise in corn prices domestically. Additionally, corn production forecasts have not been met, partly due to adverse weather conditions, leading to expectations of sustained high prices for corn until the arrival of the new season's harvest. This situation underscores the challenges faced by India in balancing domestic demands with export competitiveness, particularly in the agricultural sector.
Read More About Corn Production Cost Reports - Get a Free Sample Copy in PDF
According to the article by Procurement Resource, surging local corn prices in India, up by approximately 2.12% from December 2023 to January 2024 and a further 6.05% into February 2024, have undermined its export competitiveness. This price increase has significantly reduced exports, leading to a shift by major importers towards more affordable South American alternatives.
