Delayed, below-par monsoon to hit corn output, exports

By Meenakshi Sharma

GOLEGAON India (Reuters) - The late arrival of monsoon rains in India this year has forced Ramesh Shakharam Ghonghe to delay corn sowing by a month on his land in Maharashtra, a hold-up that threatens to cut his yields in half.

Like 58-year-old Ghonghe, many other farmers missed out on the peak sowing period in June and July, which will reduce yields to around 3 tonnes per hectare and delay the arrival of the new-season crop to November from October.

Some farmers can't make ends meet and are switching to crops such as soybeans that offer better returns. That, along with the poor rains, will reduce output and exports from India, a relatively small global supplier but an increasingly important regional player, especially in the Southeast Asian market.

"How will I pay back my loans?" asks Ghonghe, toiling in the sun on his three acres (1.2 hectares) of land in Golegaon village in Maharashtra. "Sowing is delayed. The crop needs at least three to four rounds of water but there's no rain."

Ghonghe's corn looks stunted. Around this time last year it was up to 3 feet tall.

India's Earth Sciences Minister says there is no evidence of a drought yet. Even so, on Tuesday he forecast June-September monsoon rainfall would be just 87 percent of the long-term average after the season got off to its weakest start in years.

Adding to farmer Ghonge's woes, his costs have gone up around 20 percent this year as seeds, fertiliser and labour have all become more expensive.

India's corn production is expected to rise 8 percent to 24.19 million tonnes in the current crop year ending Sept. 30, thanks to plentiful rain during the sowing period last year plus an increase in acreage devoted to corn.

But industry analysts forecast the crop will fall 15 percent next year. As a result, exports could drop for a second straight year in 2014/15 by more than 15 percent to about 2.5 million tonnes.

The global corn market is around 90 million tonnes so the impact on prices may be limited.

But the regional market may feel the effect: India has become a key supplier to Southeast Asia due to its proximity and its willingness to supply in small containers or vessels of 15,000-20,000 tonnes, rather than the 50,000 tonne panamax ships that ply the waters from South America.

ALTERNATIVES

In Deshmane, another village in Maharashtra, farmer Avinash Dughad has shifted completely from corn to soybeans, which require less water and mature in 90 days compared with 120 days for corn.

"Why should I invest in corn when prices aren't attractive? We don't need any government subsidy but we do want proper market prices," said Dughad, sitting in his mud house.

Local corn prices have fallen more than 9 percent in the past six months, although that still leaves them $30-$40 per tonne higher than global prices, exporters said.

World corn prices are falling due to forecasts of record U.S. production in 2014, set to crack the 14 billion bushel mark for the first time, the U.S. Department of Agriculture said on Tuesday.

"India's corn exports are not going to be more than 2.5-2.7 million tonnes in 2014/15 because our prices are higher than our competitors and production is expected to be lower next season," said Raju Choksi, a vice-president at Anil Nutrients, a corn exporter based in Ahmedabad.

Delayed supplies and lower production are expected to lift prices of new-season corn, but the farmers don't appear motivated to push up output.

"Prices are bound to go up next season but farmers won't get anything as middlemen and big traders eat away all the margins," said farmer Damodar Mudgul.

(Editing by Krishna N Das and Alan Raybould)