Higher global corn stocks likely to dent Indian kharif sowing in 2015-16: USDA

Indian sowing of corn in Kharif 2015 is likely to be lower this year as global oversupply impacts domestic prices and exports, thereby impacting return on investment of growers. Global oversupply has led to higher ending stocks due to which international corn prices have fallen by around 27% since April 2014.

(Source: US Department of Agriculture)  

As per latest data from US Department of Agriculture, the ending stocks for 2014-15 trade year is estimated to rise 10.3 per cent to 188.45 million metric tons (mmt) compared to 170.84 mmt at the end of last year. As per data, United States with rise of 15 mmt in ending stocks would contribute maximum to ending stocks globally.

Raju Choksi, vice-president (agri commodities), Anil Nutrients Ltd, says, ''Higher ending stocks is an area of concern for domestic as well as international markets. The falling prices will impact sowing in India as well as other major exporting countries like US, Brazil and Ukraine.''

The current firmness in the domestic prices of corn can be attributed to unseasonal rains in few growing regions of country that has delayed harvesting and thereby Rabi arrival of crop.

''We expect prices to soften once Rabi crop arrivals start from next month. The global situation is likely to put pressure going forward on Kharif sowing as growers are likely to avoid sowing a crop, which is already in abundant supply,'' Choksi says.

Since last few years, demand for corn as feed has risen in India as compared to demand for food, seed and industrial consumption. In fact since last four years, the ratio of feed consumption has crossed half way mark and remains at 55 per cent for 2014, highest so far.

The Indian market is following world market as far as consumption pattern is concerned. However, the ratio of feed consumption globally is higher at around 80 per cent compared to 55 per cent in India.

"We expect this trend to continue as growers shift to corn for feed following lower oil-meal production," Choksi said.

(Source: US Department of Agriculture)