Maize futures on Ncdex fall 4.7% in December

Although the government has not banned maize exports, future prices have witnessed a negative rally.

Reasons: a higher moisture content in new arrivals and the absence of speculation that had dictated the price movements until recently. Prices should stabilise at current levels, but once the demand for dry maize rose they would shoot up, market sources said.

Since the start of December, the near-month maize contract on the National Commodity & Derivatives Exchange has declined 4.7 per cent to Rs 750 today, from Rs 787 a quintal. Similarly, the January contract has seen a drop of over 4.6 per cent to Rs 768 from Rs 805 a quintal in the same period.

"The speculative aspect, which had pushed up maize futures, is not there now. At present, it is the real situation which is deciding the rates," said Kaushik Khona, chief financial officer, Gujarat Ambuja Exports, an agro-processing conglomerate.

He added the prices were expected to stabilise at current levels. Last month, maize futures had breached the Rs 800 a quintal mark.

This year, maize crop is expected to be on the weaker side "� domestically as well as globally. The country is estimated to produce 13 million tonne against the requirement of 14 million tonne.

However, industry sources estimate that, in case ban is not imposed on maize exports, total exports may touch one million tonne, resulting in an overall shortage of two million tonne.

"Prices should not fall beyond current levels. They should stabilise at these levels," said Amol S Sheth, president, All India Starch Manufacturers' Association. "Once the demand for dry maize goes up, the prices may see northward movement," he added. The new arrivals had high moisture content.

According to a Mumbai-based starch manufacturer, current arrivals of maize have higher moisture content of 15-16 per cent. "It (moisture content) should not be more than 12 per cent.

Because of higher moisture content, no one is stocking maize, which needs to be consumed as soon as it arrives," he said.

Once dry maize started arriving, stockists would come into the picture, and that would jack up the prices, he added.