Starch prices may rise on low maize output

Lower maize production and increased consumption may firm up starch prices. Manufacturers expect a 10-15 per cent rise in the days to come.

In the wake of low output in Andhra Pradesh and Uttar Pradesh due to scanty rainfall, country’s maize production during the current crop year (July to June) may decline by 1 million tonnes compared with the last year.

Starch producers consume around 11 to 12 per cent of maize produced in India. “Decline in maize output would certainly have an effect on starch industry. Starch manufacturers may face shortage of maize in the coming months,” said Gautam Choudhary, managing director, Santosh Starch Products based in Ahmedabad.

“Currently, the price of dry starch is around Rs 20,000 a tonne, which may surge by 10 to 15 per cent,” Choudhary added.

All India Starch Manufacturers’ Association (AISMA) president Amol Sheth, too, agreed that starch prices would rise as demand prospects for starch products look bright. However, refrained from quantifying the price rise.

The upward movement in prices is yet another factor that may fuel starch prices. “Maize prices are currently ruling at Rs 950 to Rs 1,000 a quintal, which hovered around Rs 700-750 in the same period last year. This indicates that starch prices would also remain on a higher trajectory,” said Vishal Majithia, managing director of Mumbai-based Sahyadri Starch.

Starch finds application in food, textile and adhesives. Also, the use of starch in sugar derivatives has also risen. Liquid glucose, which is produced from starch, is used increasingly as a sugar substitute for manufacturing confectionery.

“Firm sugar prices have forced many to use starch as its substitute. This would further boost the demand of the commodity,” said Santosh Choudhary.

Maize output in the country is estimated to fall by 1 million tonnes in 2009-10 (July-June) from 16 million tonnes last year. “Though the kharif maize acreage in the country was more or less the same, the production in Andhra Pradesh and Uttar Pradesh was adversely affected due to erratic rainfall. Maize crop in Maharashtra and Karnataka was also affected following scanty rain,” explained AISMA president Amol Sheth.

Maize is sown in both the kharif and rabi seasons of the year. Kharif output of maize this year is estimated to be lower by 1.5 million tonnes from 14 million tonnes in the last kharif season.

“However, the sowing of maize in the rabi season (starting October) is currently under progress and the industry players estimate it to rise up to 3.5 million tonnes during the season. This will take the total maize production in the country to 15 million tonnes in 2009-10,” Sheth added.