Low arrivals fuel maize 7% in 10 days

Maize prices have gone up by about 7 per cent in the last 10 days as demand for the commodity is on the rise while market arrival is going down. Spot prices of the commodity have gone up from Rs 690 to Rs 740 per quintal this month.

Even maize futures continue to be bullish since the last fortnight and marketmen said that the commodity is expected to maintain its firmness till the new crop arrives.

The contract for June delivery at the National Commodity and Derivatives Exchange (Ncdex) went up from Rs 731 a quintal from the beginning of the month to Rs 760 now. The contract for July delivery has risen by 3 per cent during the period to close at Rs 771 a quintal on Tuesday.

Similarly, the consecutive August contract scaled up to Rs 780 a quintal. Both the July and August contracts were at Rs 747 and Rs 757 a quintal respectively at the beginning of the month.

Commodity analysts said the southwest monsoon is playing an important role in stoking the market will bullish sentiments.

"The arrival of maize is low and the crop season has come to an end. But demand continues to remain firm from the poultry industry, that uses maize corn as a primary feed. Demand for poultry produce increases during the monsoon," said a commodity analyst with Karvy.

Prices are expected to rally up to Rs 800 a quintal levels in the futures market and to Rs 780 in the spot market, he added.

Akshita Bhatt, an analyst with Kotak Commodities, said, "There was range-bound movement in the maize market when news of an early monsoon broke out. But since the monsoon became static, it had its impact on the market."

According to her, the progress of the monsoon will decide the market trend. "As the new crop is expected only in September, the maize market is expected to remain firm," she added. Around 75-80 per cent of the total maize crop in the country comes in kharif season.

Market experts said that monsoon has covered parts of Karnataka, but is yet to arrive in Maharashtra - the main kharif maize growing region in the country, followed by Karnataka.

Analysts said that July futures can go up to Rs 789 a quintal - Rs 18 up from the existing rates. Rabi crop from Bihar is still arriving in the market. Spot rates are reported to be trading between Rs 700-720 a quintal.

The annual consumption of maize is estimated at 14 million tonnes. Poultry and starch industries are the two main consumers of maize in the country. Poultry prices have already moved up by about 20 per cent last month due to a rise in the feed cost.

Starch industry is also likely to feel the impact of rising maize prices in future. "We were buying maize at Rs 750 two weeks ago and now we are paying Rs 790 for the same mainly because of a slowdown in availability. If prices continue to rise, it will have an impact on the profitability of starch industry," said Amol S Sheth, president of All India Starch Manufacturers Association and managing director of Anil Products, which produces starch.

The third advance estimates released by the Ministry of Agriculture in April puts the 2006-07 maize production at 13.85 million tonnes, down 5.87 per cent from 14.71 million tonnes produced in 2005-06.