Maize futures drop as govt canalises exports

The maize futures on the NCDEX continued to witness a bearish trend on Wednesday following the government's decision to canalise maize exports. The near-month contract saw liquidation amid low volumes, while fresh short positions were built for the May and the June contracts amid low volumes.

Maize in the NCDEX spot market closed at Rs 747 a quintal on Tuesday, with the prices heading south on Wednesday too, as canalised exports will result in more stock available in the domestic market.

The Centre has banned direct exports of maize. According to the notification released by the Director General of Foreign Trade, ministry of commerce and industry, maize would be exported only by government agencies such as STC, MSTC, MEC and Nafed. The ban on direct exports will continue for the next six months.

In the last three trading sessions, prices of maize futures have fallen by nearly 5 per cent. On the NCDEX, maize futures for March delivery closed at Rs 770 a quintal on Saturday. On Wednesday, the March contract traded at Rs 736, down by Rs 34. The maize spot price on the NCDEX at Rs 747 shows that futures are trading at a discount. The market has taken a bearish view on maize at least in the short term.

Spot prices in Nizamabad are also on the decline. The prices were around Rs 770 on Tuesday and continued to fall on Wednesday, with the market estimating the prices to settle in the range of Rs 710-725. Welcoming the government decision to canalise maize exports, Amol Sheth, president of the Starch Manufacturers' Association, said, "Our demand for regulating maize exports has been met and we feel this will result in lowering exports by around 5 lakh tonne. This will stabilise the prices." Sheth also suggested that maize futures needed more regulation. The settlement should be based on deliveries and speculation in maize should be controlled, he added.

Meanwhile, starch prices, which were expected to go up after a decision to cut production, have not risen, as many starch producers had stocked maize and tapioca arrivals continued longer than expected. Prices of maize starch at various centres are in the range of Rs 825-875 per 50 kg. Sheth feels starch prices may go up after March 15, with tapioca arrivals slowing down.