The domestic starch makers are witnessing a rise in demand for their finished products. This upsurge can be attributed to the textile sector which players say will sustain. According to them, growth in demand will help firm up starch prices.
The starch prices have increased to Rs 800 for a bag (1 bag = 50 kg) from Rs 725-730 a bag in the last couple of weeks, and are expected to rise to Rs 840 a bag. Starch is essentially produced from maize as a raw material.
“Demand from the textile industry for starch, which declined to as low as 30 per cent, has bounced back to 40 per cent,” said Navin Vij, general manager (marketing) of the Delhi-based Bharat Starch Industries.
Normally, during summer the demand for starch goes up and sustains till rains set in by June-end. Higher prices of tapioca starch is another factor which is boosting maize-based starch. On an average, cost of tapioca starch is ruling around Rs 20 a kg, Rs 4 higher than that of maize starch.
“This parity in prices has also boosted demand for maize-based starch,” added Majithia.
Amol S Sheth, president of the All India Starch Manufacturers’ Association, told Business Standard, “Demand is on the upside and will reflect on the prices as well in the near term. The prices should go up by around 5-10 per cent.”
Concern over adequate availability of maize continues to haunt the starch manufacturers. Presently, the producers are hardly keeping stocks for a month since prices of maize are up.
“It makes no sense to keep a lot of stocks at such a higher price,” said Vishal Majithia, managing director of the Mumbai-based Sahyadri Starch. According to him, the landing cost of maize at the factory for the company is Rs 850 a quintal. Likewise, in case of Bharat Starch, landing cost at its factory in northern part of the country is around Rs 900-950 a quintal. “Higher minimum support price (MSP) of maize is the main culprit which has pushed up the prices of raw material,” said Vij.