 "Stable maize prices to aid starch makers")
Maize prices are likely to remain stable this year. This is expected to help starch manufacturers run plants at full capacities and record good margins. Last year, their margins were hit due to the high prices of maize, a key raw material.
Bleak prospects on the export front due to uncompetitive prices of Indian maize in the global market and the better crop expected this year is likely to help starch companies.
Sources said earlier it was expected the export demand would rise due to the crisis in Ukraine, a major exporter. However, with de-escalation of the crisis, the demand is likely to remain unchanged. This year, prices have ranged between Rs 1,200 a quintal and Rs 1,250 a quintal, against the minimum support price of Rs 1,310 a quintal. Last year, prices were Rs 1,650-1,700 a quintal.
Annual contracts for the supply of starch and its by- product, glucose to end- users, particularly the pharmaceuticals sector, account for about 20 per cent of total supplies. For any particular year, such contracts are usually signed in the November-December period of the preceding year. Therefore, any rise or fall in prices after this period didn’t have a major implication on starch manufacturers, Majithia said.
I K Sardana, managing director of Sukhjit Starch and Chemicals, said, “We ran our plants at 65-70 per cent capacity two years ago, as maize prices shot through the roof. Now, the plants are being run at 100 per cent capacity and we expect this to continue for some time.”
He added through the last few years, Indian starch manufacturers had faced tough conditions due to a consistent rise in maize price, which also affected poultry and cattle feed manufacturers.
Market analysts say as the weather plays a crucial role in maize production, a slight variation in the monsoon could play spoilsport. However, it seems the going will be smooth in the next few months, as the rabi crop, due in April-May, is expected to be close to estimates.
Bleak prospects on the export front due to uncompetitive prices of Indian maize in the global market and the better crop expected this year is likely to help starch companies.
Sources said earlier it was expected the export demand would rise due to the crisis in Ukraine, a major exporter. However, with de-escalation of the crisis, the demand is likely to remain unchanged. This year, prices have ranged between Rs 1,200 a quintal and Rs 1,250 a quintal, against the minimum support price of Rs 1,310 a quintal. Last year, prices were Rs 1,650-1,700 a quintal.
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Vishal Majithia, president of the Starch Manufacturers Association, said, “We are expecting the prices to remain stable, as the rainfall has been, the area under maize has increased and the fact that export demand is low. Prices entirely depend on the demand-supply situation. A change in demand isn’t projected in the near future. So, any change in supply could affect the price. Since rabi arrivals of maize are expected to be good, there is no fear for the near future.”
Annual contracts for the supply of starch and its by- product, glucose to end- users, particularly the pharmaceuticals sector, account for about 20 per cent of total supplies. For any particular year, such contracts are usually signed in the November-December period of the preceding year. Therefore, any rise or fall in prices after this period didn’t have a major implication on starch manufacturers, Majithia said.
I K Sardana, managing director of Sukhjit Starch and Chemicals, said, “We ran our plants at 65-70 per cent capacity two years ago, as maize prices shot through the roof. Now, the plants are being run at 100 per cent capacity and we expect this to continue for some time.”
He added through the last few years, Indian starch manufacturers had faced tough conditions due to a consistent rise in maize price, which also affected poultry and cattle feed manufacturers.
Market analysts say as the weather plays a crucial role in maize production, a slight variation in the monsoon could play spoilsport. However, it seems the going will be smooth in the next few months, as the rabi crop, due in April-May, is expected to be close to estimates.