Starch rises on firm maize prices

The over 10 per cent rise in maize prices in the domestic market has increased starch prices by Rs 50 per 50 kg in the last two weeks. Maize is a key raw material for manufacturing starch.

“Starch prices have increased to Rs 950 per 50 kg from Rs 900 within a fortnight,” said Vishal Majithia, managing director of Mumbai-based Sahyadri Starch.

According to industry players, the season for maize procurement is over and the new crop will be sown only after the arrival of monsoon in the country. However, there is good demand for maize in local markets as the 2009-10 crop yield was lower than the previous year.

Lower output
Maize is grown in both kharif and rabi seasons. According to data provided by industry players, kharif maize output is estimated at 12.5 million tonnes for 2009-10 as compared to 14 million tonnes in the previous year.

The rabi season output is estimated at 4.68 million tonnes as against 5.60 million tonnes in the previous year. Overall, maize production in 2009-10 is likely to be 17.28 per cent lower, or 3.41 million tonnes less, at 16.32 million tonnes, from 19.73 million tonnes in 2008-09.

“The maize season has come to an end and new crop arrivals have dried up. This has increased prices around seven per cent,” said Gautam Chowdhary, managing director, Santosh Starch Ltd. In Maharashtra, the crop’s price has risen by Rs 100 a quintal to Rs 1,000-1,050, while in Gujarat, the rate is Rs 1,030-1,035 a quintal.

Moreover, sowing for the ensuing kharif season will start only after the arrival of monsoon in the country. “A clear picture regarding maize acreage and production will emerge only after June,” said a trader.

In this backdrop, marketmen see a further rise in starch prices. “Further increase is likely, say by another Rs 50 per 50 kg,” Majithia said.

However, there are others who believe the price rise will be limited to Rs 10-20 per 50 kg, as many industrial maize consumers like starch producers already have the required stocks.