Maize prices dip on high crop estimates

Higher kharif output estimates and continuous poor demand have sent the maize markets, both futures and spot, into the red. Marketmen said the sentiments would remain weak till fresh local demand poured in.

According to the statistics available from the ministry of agriculture, maize acreage has increased this season by 7 per cent to 64.6 lakh hectares from 60.4 lakh hectares last year.

Akshita Bhatt, commodity analyst with Kotak Commodities said, "Kharif output of maize may increase by 10-15 per cent this year, as crop is good."

During the last kharif season, maize production was over 11 million tonnes, which this year may reach close to 12.5 million tonnes. With a positive output estimate, market was expected to remain bearish, she added.

Subscribing to her views, Vijay Kumar Hambali, a Davangere-based trader said, "Demand is poor and the spot rates have already dipped to Rs 700 a quintal from Rs 750 a quintal during the last month. A further fall is on the cards."

According to market sources, reports of bird flu in the eastern part of the country coupled with the ongoing Shravan month is taking a toll on the poultry industries, thereby decreasing demand for maize from this sector. Poultry industry takes a lion's share of the total output of maize in the country.

Major kharif maize crop comes from Karnataka and Andhra Pradesh. Reports suggest that in Tamil Nadu, the crop size is estimated to be around 500,000 tonnes. The new crop is expected to arrive by the first week of October. However, due to delayed monsoon, marketmen said, the crop might be harvested in November.

Amit Sachdev, Indian representative in the US Grains Council, said, "As the starch and poultry industries are well covered, bearishness is there to stay in the maize market. However, after mid-September, market can see upward rally."

So far, the crop status has signalled a positive outlook. But the next 45 days, ahead of the harvest, can be crucial. According to Hambali, during this period, crop will require two spells of showers after a fortnight from now. "If weather remains favourable, production will not drop," he said.

Yield of kharif maize crop is better than its rabi counterpart. Analysts said crop from Andhra Pradesh was better both in quantity and quality in comparison to what came from Karnataka. In Karnataka alone, the stock of old maize is to the tune of 20,000 tonnes.

On the global front too, the maize production is on the rise this year. The latest report of the United States Department of Agriculture (USDA) on corn crop estimates the production to be 332 million tonnes, up 24 per cent, compared with last year.

On the National Commodity and Derivatives Exchange (Ncdex), the near- month maize contract (which is due to expire on 20 August) closed at Rs 749 a quintal against the previous close of Rs 754. Similarly, contract for September delivery dipped to Rs 740 from Rs 742 a quintal.