Starch prices may move up

The starch market may see a marginal rise in prices over the next one month following the shortage of maize and the firming up of demand from end users.

Starch rates which were ruling around Rs 850 a bag (of 50 kg) a few months back are now hovering around Rs 750-800 a bag. However, since the new maize crop is expected only in October, market sources said that starch could witness upward pressure. The market has stabilised at the current levels over the last three weeks.

"Starch rates have firmed up by around a rupee per kg to Rs 15. We expect another jump of Rs 1-1.5," said Amol S Sheth, president, All India Starch Manufacturers' Association. This would mean that a bag of starch which at present is at Rs 750 could rise to Rs 800-825.

Vishal J Majithia, managing director, Sahyadri Starch - a Mumbai-based firm, said, "Demand for starch is steady in the market, mainly from the textile and confectionery industries."

As farmers fetched good prices in 2006-07, market experts said that there was a possibility of augmented production this season. Rains in Karnataka - a major maize producing state - is a good signal for crop estimates. According to Kaushik Khona, chief financial officer, Gujarat Ambuja Exports, production of maize is expected to see an increase of 10 per cent.

Though commodity analysts too agreed, they added that the high cost of production could offset the profits of farmers. On the current pricing front, they added that the maize market would remain steady. Ruling out any cuts in rates, they said the prices could move upward.

According to a US Grains Council report, maize prices for the last two weeks have been slightly higher than the first week of June. Current prices are at Rs 7,400-7,500 a tonne at the market yard. It also added that consumption centres close to production centres are experiencing good delivery rates. Prices in Kolkata were close to Rs 7,600 per tonne which sourced its stocks from Bihar, while prices in Gujarat delivered at the starch plants were close to Rs 8,200 per tonne.

On the National Commodity and Derivatives Exchange (Ncdex), the near-month contract in the last one month saw the market steadily moving from Rs 745 to Rs 773 a quintal, up 3.76 per cent. In the spot market, across the country, prices are hovering around Rs 740 - 770 a quintal. On Thursday, maize futures closed at Rs 779 against the previous close of Rs 773 a quintal.