Imported maize still out of starch firms' reach

Despite an import duty waiver on maize, the starch industry is highly unlikely to get any relief, as imported prices of maize are still higher than the domestic ones.

Moreover, the rising maize prices have left starch manufacturers with no option but to raise prices of starch, which are likely to go up by February-end.

Starch prices are, currently, in the range of Rs 825-900 a bag (of 50 kg) depending on the grade, while maize is quoted between Rs 750-770 a quintal in mandis.

"There is no point in removing import duty on maize, as it will have no impact on the domestic market. Moreover, there is no import of maize at present," said Kaushik Khona, chief financial officer, Gujarat Ambuja Exports.

When the import duty was in place, the total landed cost of imported maize was around Rs 1,600-1,650 a quintal. Now, without duty, it has slipped to Rs 1,050-1,100 a quintal - still over Rs 300 more than the prevailing domestic prices.

On the global front in the near future, prices are nowhere seen dropping. With when more than a dozen maize-based ethanol plants coming up in the United States this year, the largest producer of maize, chances of exports from the US are slim. International prices might come down only when production went up.

But such chances were slim, said a Mumbai-based expert who tracks global maize prices.

"The government's decision is in no way going to bring down the rising rates. Maize rates are scaling higher and within a month (by February) the effect would be seen on starch prices as well," said Ganpatraj L Chowdhary, managing director, Riddhi-Siddhi Gluco Biols. Within a fortnight, the supply of maize will fall short, putting pressure on starch, he added.

Until recently, starch managed to have some stability in the market, as many manufacturers had shifted to tapioca.

"In the next three to four weeks, tapioca supply will keep coming in and its prices may remain subdued. That will keep prices of maize starch under check, but from February-end, maize starch prices will go up," said a leading Mumbai-based starch manufacturer.

Tapioca starch prices are falling and, in the last three months, it has come down from Rs 1,750 per 90 kg to Rs 1,375 for super fine quality and Rs 1250 for ordinary quality. Arrivals of tapioca will slow down from mid-March.

The poultry industry too, which consumes more than 60 per cent of the maize produce in the country, seems to have no respite.

"The international prices are high. Even after making maize duty-free, the overall rate, including freight, will remain more than the domestic rates. As a result, there is no major impact of duty-free maize on the poultry industry," said O P Singh, managing director, Venkateshwar Hatcheries.

Only after June, there could be something positive to say, but again, it depends on the rabi crop, he added.

The rabi crop of maize is expected to be around 3 million tonne on the back of around 30 per cent increase in acreage. The kharif crop amounted to 11.43 million tonne.