A seasonal report on Maize - Karvy Commodities Broking

26 July 2012A <strong>seasonal</strong> <strong>report</strong> on MaizeSowing: June-AugustThis <strong>report</strong> holds a bullish view for next two months (July and August, 2012)anticipating production to be lesser while demand determinants are huge fromvarious sectors.

IntroductionMaize is basically a cereal crop. It is also known as corn and mostly grown as a rainfed crop. It isconsumed as a staple food in many countries like South America, sub Saharan Africa, Kenya. The cropseason in India generally begins in the month of mid May and continues until June end. In India, the majorproducers are Karnataka, Andhra Pradesh, UP, Bihar, Punjab, and Tamil Nadu. The major producers in theworld are US, China, Brazil, Mexico, India and consuming countries are China, USA.Crop seasonsGlobally maize is grown in all seasons and hence, is available throughout the year. The crop seasons ofChina, India and United States are same i.e. summer months of April and May. On the other hand, Rabi cropof India starts just few days after the harvesting of crop in China, US. Hence, Maize is grown practicallythroughout the year in India. India can make use of this <strong>seasonal</strong>ity pattern to supply the produce to thecountries which are in demand of Maize. Sowing in Brazil starts in August. Indian Rabi season sowing startsby October and harvest takes place in February- March.COUNTRYIndia KharifIndia RabiU.SChinaMexicoArgentinaBrazilSouth AfricaSOWINGMAIZE (MAKKA)JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECHARVESTINGMaize Prices PerformancePrice review of Maize from 2008-1217001600Weather concerns,inadequate sowing15001400130012001100wide mismatchbetween demand& supply, highpoultry demandHigher domestic andexport demandself sufficiency inproduction,increased SRR, NTAs,Huge demand , lessarrivals1000900800700Global recessionGood crop, recordproduction levels60005-01-2008 05-01-2009 05-01-2010 05-01-2011 05-01-2012Sources: Bloomberg & KCTL Research

In the initial months of the year 2008, prices were very much low due to global recession because of whichthe demand went down. However, during later months maize prices move up due to the mismatch betweenthe demand and supply and higher poultry demand. The production was quite good in the year 2009-10because of various reasons like self sufficiency in production, increased SRR (Seed Replacement Rate),increase in acreage of NTAs (Non Traditional Areas). Due to the higher supplies during Rabi season maizeprices fell drastically during initial months of 2010. Subsequently, higher domestic and export demandsupported maize prices to recover and prices at NCDEX touched its yearly high. In year 2011, productionwas very good contributing 21,300 metric tonnes which resulted in huge fall in maize prices. However, inthe beginning of the year 2012, prices went up because of huge demand and less arrivals. Prices in themonths of July 2012 made a new all time of Rs. 1640 per quintal at NCDEX Platform because of weatherconcerns which has affected sowing to a large extent. The anticipated crop loss due to unfavourableweather is keeping maize prices firm.Factors Affecting Maize PricesIt has wide applications in various fields; it is consumed as such after boiling, in fried form, poultry andcattle feed, bio-ethanol production, production of industrial products like starch, protein etc. Prices dependbasically on the demand and supply factors, inventory levels, current production levels, prices of related orsubstitute products like Soybean, domestic and international demand, consumption levels of meat, Govt.interventions like MSP etc. Diversion of crop for purposes other than food production (fuel) also leads toincrease in prices.Global scenarioWE and China are the largest maizeproducer in world followed by EU-27,Brazil and India. According to theseason of the crop, the produce ofIndia arrives in the market at thesame time as that of the topproducers like United States, China,and European Union etc. HenceUnited States and India will haveenough surplus to supply to the worldand cater to the need of importingnations thus satisfying the food, feedand industrial sector demand. Thewinter crop of India arrives in themarket at the time after which theproduce of Brazil also enters themarket.India has an upper hand in supplyingthe produce to the world markets since it has a dual crop season. So in case of any problem due toproduction or climatic concerns in Brazil, India will be in a position to supply to the demanding countries.World balance sheetGlobal Maize production is growing at the CAGR of 4.35% for the past five years and consumption by4.07%. Most of the global demand is estimated to be driven by China because of its increasing Hog herd,poultry population.Years Total Supply (Million Tons) Total Demand (Million Tons)Beginning stocks Imports Production Exports Consumption Ending stocks2008-09 131.608 82.639 801.160 84.486 782.840 148.0812009-10 148.081 90.183 819.364 96.858 816.850 143.9202010-11 143.920 92.602 829.115 91.392 849.927 124.3182011-12 124.318 93.975 872.983 96.407 865.679 129.1902012-13* 129.190 100.316 949.933 105.322 918.379 155.738Source: USDA estimates (* projected)Maize Producing countries in worldIndia2%Ukraine3%EU7%Brazil8%Others22%Sources: USDA & KCTL Researchchina22%US36%

According to USDA, production & consumption for year 2012-13 is expected to increase by 9% and 6%respectively, hence adequate supplies will be there for exports. Therefore, lower imports and higherexports are projected for 2012-13. However, 6% of crop got damaged due to La Nina.Major Importers & Exporters of Maize in WorldThe largest maize importer in World is Japan followed Mexico, South Korea followed by EU-27, China.European Union can import from United States since enough supplies are projected.United States is the largest maize exporter in world followed by Argentina, Ukraine and Brazil. Thedestination for exports are slightly different compared to the previous years. India and Ukraine has acompetitive advantage in maize exports to China due to lower prices as compared to US and good supplies.As per the 2011-12 estimates, the top exporters of Maize in the world are United States (South America),Argentina, Ukraine and Brazil. The major countries that import maize are Japan, Mexico, South Korea andChina but by the end of the year 2014, China is expected to become the top importer of maize in the worlddue to the continuously increasing demand from the feed industry which is more than 61% of the totaldemand.Major Maize ImportersMajor Maize ExportersOther41%China Egypt5% 5% EU-276%Iran4%Japan16%Others11%Argentina15%Brazil13%EU-273%Taiwan5%Mexico10%Korea,South8%UnitedStates41%Ukraine14%India3%Source: USDA & KCTL ResearchMaize Balance Sheet- CHINATotal Supply (Million Tons)Total Demand (Million Tons)Years BeginningstocksImports Production Exports Consumption Endingstocks2011-12 49.415 5 192.780 0.2 188.000 58.9952012-13* 58.995 7 195.000 0.2 201.000 59.795Source: USDA estimates (* projected)As per USDA estimates, production is expected to increase by 1% and consumption by 7%. This widemismatch between the demand and supply will arise due to the ever increasing population, increasing percapita meat consumption and hence feed demand apart from industrial demand for starch, corn syrup andother processed products. Production is stagnant; productivity is not increasing compared to the area. Eventhough the beginning stocks are more by 19%, it is expected that the demand will not match with thesupply due to increasing consumption. In the 2010 crop year, around 70 tons of every 100 tons of cornused in China were used for feed. China’s Corn production in 2010 decreased by 13% to a four year lowdue to drought and hence China became an importer of corn from 2010 from being an exporter. Cornimports are taking place apart from soybean imports. For the first time, China has started importing cornfrom Ukraine due to lower cost than US and it is non genetically modified crop. So, Chinese firms are able toprocure the raw materials in abundance at cheaper rates to fulfil all their demands. While, imports areexpected to increase by 40% Y/Y. Previously, it was dependent on United States entirely for its supply. But

now, China has become aware of its import needs, hence it is diversifying the supply sources. It has signed asanitary protocol for supply of quality corn with Argentina in March 2012.Maize Balance Sheet- UNITED STATESYears2011-12Total Supply (Million Tons)Total Demand (Million Tons)BeginningstocksImports Production Exports Consumption Endingstocks28.644 0.508 313.918 41.912 279.540 21.6182012-13* 21.618 0.381 375.683 48.262 301.639 47.781Source: USDA estimates (* projected)Production will improve due to improved technology and change in cultivation practices. Production isslated to increase at a faster rate of 20% compared to consumption rate of 8% mainly due to increasedacreage. Few areas got damaged due to high temperature but it is expected that it will rain in the next 2-3weeks which will compensate for the loss. The number of feed grain farms has decreased but acreage percorn farm has improved and number of large corn farms has increased over time. Most of the domesticdemand is due to increasing Latin American population, food use, fuel use in the form of ethanol. Almost30% of the corn production goes towards production of ethanol since 180 corn based ethanol plants arethere in U.S. Hence adequate supplies are expected to be there to meet the demand arising from varioussectors. Exports are supposed to increase by 15%. Heat waves are predicted to affect the export of corn toEuropean Union. Even though the beginning stocks are estimated to be less by 25%, enough production isprojected for supply. Hence, corn trade prospects are very good compared to other countries like China.Maize Balance Sheet: EUROPEAN UNIONYearsTotal Supply (Million Tons)Total Demand (Million Tons)BeginningstocksImports Production Exports Consumption Endingstocks2011-12 4.923 5.500 64.636 2.70 67.0 5.3592012-13* 5.359 7.0 64.150 2.0 69.5 5.009Source: USDA estimates (* projected)Production is expected to decrease by 1% whereas consumption is expected to increase by 4%. Hence, EUhas to import corn from other countries. Imports are projected to increase at the same rate as that of theincrease in exports. Even though the beginning stocks are more, still the country has to import from otherproducers because of increasing demand from various sectors like feed, residual use. As mentioned in theabove paragraph, the country has to import corn from countries like United States, Brazil or othercountries.Maize Balance Sheet: BRAZILYearsBeginningstocksTotal Supply (Million Tons)Total Demand (Million Tons)Imports Production Exports Consumption Ending stocks2011-12 10.276 0.8 69.0 12.0 54.0 14.0762012-13* 14.076 0.8 67.0 12.0 56.0 13.876Source: USDA estimates (* projected)It is expected that the production will decrease at the rate of 3% compared to consumption which will growat the rate of 4%. The country can manage without importing the produce since enough carry over stocks ofthe previous year are available to fulfil the demand. The beginning stocks have increased by almost 37%.Hence, the rate of import is estimated to be constant compared to the last year. Poultry demand hasincreased by around 3%. Compared to the previous year, consumption is expected to be more than theproduction due to increased industrial use compared to feed use and increased consumption of processedproducts like corn syrup.

Maize Balance Sheet: UKRAINETotal Supply (Million Tons)Total Demand (Million Tons)Years BeginningstocksImports Production Exports Consumption Endingstocks2011-12 1.121 0.05 22.838 14.0 8.8 1.2092012-13* 1.209 0.05 24.0 14.0 9.3 1.959Source: USDA estimates (* projected)The scenario in Ukraine has undergone a major change. Production is projected to increase by 5% butconsumption still further by 6%. Still Ukraine can manage without increasing its imports due to sufficientcarryover stocks from the last year which increased by 8%. It is expected to overtake Argentina as world’ssecond largest corn exporter due to the prevailing drought conditions in Argentina. Since China became anet importer from exporter a few years back, countries have turned to Ukraine for supply of Corn. Due torising demand and good profitability, usable area has increased sharply in recent years. Japan startedpurchasing from Europe since US offered at a much higher price and most of this European Corn wasshipped to Japan from Ukraine. Because of adequate supplies last year, the prices were pulled down after ithit a record high in June last year.Indian ScenarioMaize in India is grown both as akharif and Rabi crop. It is grown as aKharif crop in north India and insouth; it is grown during the monthsof April- October mostly as a wintercrop. Most of the crop is grown as akharif crop; it is sown during themonth of May and harvested in themonths of Sep-Oct. India’scontribution to the world productionis hardly 2% but it plays a major rolein trading with other countries. Areaunder Maize production, productivityand yield kept on increasing til 2010after which it started declining due toshifting of acreage towards moreprofitable crops. Andhra Pradesh isthe largest producer of MaizeMaize Producing States in Indiaothers35%Bihar9%Maharashtra9%Sources: USDA & KCTL ResearchAP21%Rajasthan10%Karnataka17%contributing around 21% of the total production followed by Karnataka (16.5%), Rajasthan (9.9%),Maharashtra (9%) and Bihar (8.9%). The major physical markets are Nizamabad, Davangere. Among theIndian states, Rajasthan has the largest area under maize cultivation.Consumption patternMost of the Maize in India is used in poultryfeed industry as it is growing at the rate of 12-15% annually. Apart from this, the produce alsogoes towards feeding the cattle, production ofstarch and other value added products like cornsyrup, corn oil, corn flakes, soups etc. Around52% of the demand is projected from poultryfeed and the remaining 48% is from others likehuman consumption and processing sector.Maize Consumption pattern in IndiaOthers27%Poultry48%Strach11%Sources: USDA & KCTL ResearchLivestock14%

Maize balance sheet: INDIAMaize production in India in the last five years has grown at a CAGR of 3.79% and consumption by 8.94%respectively. This demand supply gap is because of increasing domestic poultry demand.Years Total Supply (Million Tons) Total Demand (Million Tons)Beginning Imports Production Exports Consumption EndingstocksStocks2007-08 0.322 0.004 18.96 4.47 14.20 0.6132008-09 0.613 0.013 19.73 2.60 17.0 0.7482009-10 0.748 0.024 16.72 1.93 15.10 0.4532010-11 0.453 0.025 21.73 3.50 18.10 0.6082011-12 0.608 0.01 21.30 2.40 18.80 0.7182012-13* 0.718 0.01 22.0 2.20 20.0 0.528Source: USDA estimates (* projected)Indian maize production is expected to increase by 3% but consumption by 6% in 2012-13. This mismatchin supply demand is likely to keep maize prices on firm note during 2012-13. Exports are projected todecline by around 8% Y/Y due to excess domestic demand from different sectors like poultry, feed, andindustries. Because of poor sowing in major growing states like Karnataka, Andhra Pradesh, andMaharashtra due to insufficient and delayed rainfall, increasing demand from poultry sector, maize pricesare expected to rise in the coming year 2012-13.Apart from the cash incentives being provided by the major growing states, minimum support pricesannounced by the Government is encouraging and boosting the cultivation of maize to a large extent. Themain driving force for the demand is the increased requirement from the industrial sector.Kharif season sowing progressAs it is known to us that Indian Agriculture is a gamble of Monsoons, productivity and overall yield of anycrop depends upon the weather conditions. Because of the diminishing rainfall, sowing is getting hamperedin many parts of the country especially the major growing areas of Maize like Andhra Pradesh, Karnataka,Rajasthan and Maharashtra. Monsoon has not been good so far. Until July 11 th , rainfall received is 22%below than Long Term Average (LPA) and the northern states experienced deficit of rainfall to a majorextent. Now let us see how far sowing has progressed in the major cultivating regions.Andhra Pradesh- Until now, 51% sowing has been completed so far. 2.55 lakh ha sowing has been finishedwhich is higher than last year’s sowing of 2.11 lakh ha but lower compared to the normal sown area of 2.87lakh ha.Karnataka- The average rainfall in north Karnataka is 111cm and deficient by 37 cm which has badlyaffected sowing. Hence, sowing is not started in north districts like Dharwad, Bagalkot, Gadag and Bijapur.It is expected to pick up once the monsoon resumes.Rajasthan – Sowing has been completed in East Rajasthan because of sufficient rainfall. Only 39 cm rainfallhas been received till date in western Rajasthan which has affected sowing.Bihar- Because of scanty rains and weak monsoon, sowing has not been started.Gujarat- 5% sowing is completed in southern region of Saurashtra. It continues at a good speed in Navsariand Anand regions. North Gujarat could not start sowing because of weather concerns.Maharashtra- Sowing could not be done in Sangli, Satara, Pune and Solapur because of inadequate rainfallin the middle region of Maharashtra.

Indian Maize Export ScenarioThe major export destinations for India are UAE,Middle East, South Asia, Singapore, and Malaysia.The exports have been declining for the past twoyears and projected to decline further in 2012-13due to more domestic poultry demand. However,overall the export scenario is very goodcompared to other Maize suppliers. India has arelative price and location advantage. India is in abetter position to export the produce since theproduce is 25% cheaper compared to US anddistance to the importing countries is less, thusreducing the freight charges. Malaysia, Indonesiaand Thailand are the main buyers. India is likelyto export around 10% of its total produce in2012-13.Competitive advantage of Indian Maize exportsDemand for Indian maize from south eastern countries is likely to pick up as prices are lower as againstthat of the US corn. Maize prices in US are ruling high because of dry weather conditions thereby turning anadvantage for Indian maize exports. The price is cheaper and delivery is faster in comparison to othersuppliers. The voyage i.e. distance to Asian markets is lesser compared to other suppliers and hencelogistics cost involved is less.Proximity to the importing countries is an added advantage. Importing countries like Australia which usedto purchase from US and China has switched over to India because of the proximity and cheaper cost.Indian corn is available at US$310/ tonne for South East Asia whereas Argentine corn is quoted at US$ 340/tonne thereby leading to competitive advantage. Farmers are going for Maize cultivation since it requiresless water for growth, highly remunerative since the prices are ruling at an all time high.Relationship between poultry industryand maize productionMaize production is directly related to the 10growth and development of the Indian poultryindustry since 60% of the overall productiongoes to the poultry sector. Since soybean pricesare ruling high due to declining production,poultry owners and growers are increasingquantity of maize in poultry feed. As far as Indiais concerned, poultry is growing at a rate whichis more than that of the Maize production.Maize production is likely to increase by 3%whereas poultry sector is poised to grow by 6-8% on Y/Y. Andhra Pradesh poultry ownersassociations have requested the ministry ofConsumer Affairs and Public Distribution to86420Decline in Demandallot Wheat and Rice at subsidised rates to thePoultry Livestock Strach Otherspoultry farmers who are facing problems fromSources: Industry & TG Estimatesrising Maize and soybean prices which willhave negative impact on 2 lakh maize farmers earning who are directly dependent on poultry sector due toits immense contribution to the industry.Soy meal and Maize relationshipMaize export trend (Million Tonnes)Sources: USDA & KCTL ResearchMaize Consumption Trend (Million Tons)Maize and soy meal both are major sources of carbohydrate and protein for poultry feed. Maize and soymeal are pre dominantly used as a feed in poultry. Maize contains starch which is highly digestible forpoultry. It is highly palatable, free of anti nutritional factors and is a source of readily available energy. Soymeal contains 40-48% crude protein which is good for meat production while raw soybeans contain anti5.04.54.03.53.02.52.01.51.00.50.0

nutritional factors which can affect protein digestion, bird performance. However, feed conversion ratio isless (better) in case of Maize when compared to Soy meal.India’s balance sheet- Soy mealYears Total Supply (Million Tons) Total Demand (Million Tons)B Stocks Production Imports Exports Consumption E Stocks2011-12 0.215 7.820 0.006 4.500 3.380 0.1612012-13* 0.161 7.980 0.006 4.227 3.800 0.120Source: USDA estimates (* projected)According to the US Department of Agriculture, Soy meal production and consumption are expected toincrease by 2% and 12% respectively. Overall production is expected to decline on account of delayedmonsoons. Soy meal is preferred over poultry feed and fishmeal because of its high protein content,nutrient levels.World balance sheet- Soy mealYears Total Supply (Million Tons) Total Demand (Million Tons)B Stocks Production Imports Exports Consumption E Stocks2011-12 8.377 177.370 57.598 59.779 175.764 7.8022012-13* 7.802 183.496 58.287 60.161 180.830 8.594Source: USDA estimates (* projected)As it is seen from the table, production and consumption for the year 2012-13 are expected to increase atthe same rate of 3%. Similarly, imports and exports are projected to grow by the same rate of 1%. Here,China is going to dominate the overall Soy meal demand due to increasing Hog herd, rising exports of USsoy meal and other major producers. Because of drought in US which is a major producer of Soy meal, theprices are expected to shoot up further in the future.Price relationship of Maize and Soy mealTherefore, soybean and ultimately soy meal prices are expected to remain higher in future. The risingprices due to less production has affected the use of soy as feed and hence, demand might increased forMaize in poultry feed purpose thereby leading maize prices also on higher side.Wheat and Maize relationshipWorld’s wheat balance sheetYears Total Supply(Million Tons) Total Demand(Million Tons)B. Stocks Production Imports Exports Consumption E. Stocks2011-12 197.234 694.687 144.775 150.401 689.117 197.1782012-13* 197.178 665.326 134.716 134.709 680.068 182.443Source: USDA estimates (* projected)As it is evident from the above table, the wheat production for the year 2012-13 is projected to decrease by4% while consumption is expected to decrease by 1%. But the overall production is good. The global wheatproduction is estimated to be the second highest ever backed by India’s record production of 88.3 milliontonnes.India’s wheat balance sheetYears Total Supply(Million Tons) Total Demand(Million Tons)B Stock Production Imports Exports Consumption E Stocks2011-12 15.360 86.870 0.025 0.750 81.555 19.9502012-13* 19.950 91.000 0 4.500 85.450 21.000Source: USDA estimates (* projected)

According to USDA, wheat production and consumption both in India are projected to increase by 5% butproduction is likely to remain higher than domestic consumption. The production is estimated to be thesecond highest ever. Moreover, the carryover stocks of last year are so high that there is insufficient spacefor storage thus necessitating exports to other countries. India being the world’s second largest wheatproducer is struggling hard to manage the huge stocks due to bumper harvests for the past five years. Sofar, three public sector trading companies viz. STC (State Trading Corporation), MMTC (Minerals andMetals Trading Corporation) have floated tenders and invited bids to export wheat.Due to record procurement this year, the ending stocks in 2011-12 are nearly three times the Government’sdesired stocks of 7 million tonnes as projected by USDA. Indian govt. is expected to take decision on newwheat export policy which might open new windows of wheat export from India.Price relationship of Maize and wheatBecause of bumper crop of record levels in the Indian markets and the second highest production ever, theprices are expected to be stable in domestic markets. Even though if India exports wheat then also Indiawill be having good buffer stocks. So, wheat prices would be stable in near term. However, prevailingunfavourable weather conditions are creating threat of crop losses in maize which might keep maize priceson firm note.Maize Prices OutlookGlobalGlobal maize (corn) prices are expected to move up in short to medium term. According to the tradeprojections supply concerns are likely to push maize (corn) prices on higher side. As per the latest monthly<strong>report</strong> by US Department of Agriculture, projections for world maize production has decline in July to 905million tons down by 5% against earlier projections of 949 million tons. United States are suffering fromdry weather, drought like conditions and Indian production also would be affected due to poor sowingwhich is creating concerns of crop damage and decline in overall production against the projected figures.Trade is forecast to exceed the 2007-08 record, with China, the EU and South Korea expected to be thebigger buyers. Most of the exports will be driven by China since the population, per capita meatconsumption, industrial consumption all are increasing at a faster rate compared to the rate of populationgrowth. Tightening supply situation in US due to threat of reduced output is resulting in lower exportofferings from US, which might support exports from other cheaper destinations like India and Ukraine.DomesticMaize prices are expected to remain firm as kharif sowing has been affected to a large extent due to thedelay in the arrivals of South-West monsoon apart from inadequate amount of rainfall. The acreage hasdeclined sharply in few of the major growing states like Andhra Pradesh, Karnataka and Bihar. The totalsown acreage of maize was <strong>report</strong>ed at 21.76 lakh hectares as on 13th July 2012 against 31.38 lakhhectares in the last year. The total acreage in Karnataka declined by almost 6.63 lakh hectares to 3.39 lakhhectares while total acreage in Rajasthan declined by 7.63 lakh hectares to reach 1.16 lakh hectares as ondate. Sowing is not even started in northern districts of Karnataka like Dharwad, Bijapur, Gadag andBagalkot and it is expected to resume as soon as active rainfall is received and the ground becomessufficiently wet. From past few weeks no arrivals are <strong>report</strong>ed in major spot market of Davangere. Butarrivals were normal in Nizamabad market.Moreover, strong export demand in the domestic market is likely to keep prices on firm note in comingdays. Government has estimated the domestic exports at around 36-37 lakh tonnes in 2012, which is moreby 4-5 lakh tonnes compared to last year.In the last one year, Indian Maize prices are found to have a correlation of 0.455 with the internationalMaize prices. Though the correlation between the prices of Indian and international Maize is not verymuch; however, this year dryer weather conditions prevailing in South American regions are coincidingwith Indian weather conditions resulting in threat of crop damage. In major producing regions like AndhraPradesh (only 51% sowing completed), Karnataka (sowing is not even started in few districts).Prices are expected to be bullish in the long term. The demand is very good and further expected toincrease due to rising demand from poultry and cattle feed sector. Also, the domestic consumption hasincreased due to increase in consumption of boiled maize and value added products.

Technical Analysis: A marginal pause should be noticed before the race beginsMaize future prices have risen more than expectation after breaching the resistance at 1330 levels, gainedas much as 41% in the last three months. Now the question, still the prices have further upside potentialOR shall we expect some correction? Answer is yes. As per the above analysis (fibonacci projection, RSInegative divergence, Gap between price and WEMA are suggesting some downside correction in nearterm).Analysis as followsFibonacci principle suggests prices have risen until 161.8% (1596) from the low of 1025 (10/01/2011)and currently witnessing a resistance near the same. Sustained trades below 1596 would lead the prices tosee some dips initially towards 1470 followed by 1410 levels.RSI Negative divergence gives an indication of downside correction for short term before resuming itsbullish trend. Although price made new highs but indicator failed to move above previous high of 0.82,which may turn into negative indication of prices.Huge gap is observed between prices and EMA (8, 21 & 34) in weekly chart and it is likely to narrow innear term.Action point: As per the analysis we are seeing maize prices to come down initially may be until 1470(trend channel support) followed by 1410 levels. These are the two strong support levels to hold thebullish view for medium term.Our suggestion for short term traders are buying on dips would be ideal strategy as long as 1400 supportholds.Recommendation: Maize NCDEX: Buy at 1470-1490 TP 1650/1720 SL below 1390Note: The above call/recommendations should be applied for both August and September contracts atNCDEX

GlossaryRainfed Crop: The term rainfed agriculture is used to describe farming practices that rely on rainfall forwater and the crops grown in these conditions are called rainfed crops. In other words, it is a system ofproducing crops without the use of irrigation.USDA: United States Department of AgricultureCAGR: Cumulative Aggregate Growth rateWEMA: Weighted Exponential Moving AverageTo unsubscribe please mail us at commodity@karvy.comDisclaimerThe <strong>report</strong> contains the opinions of the author that are not to be construed as investment advice. The author, directors and other employees ofKarvy, and its affiliates, cannot be held responsible for the accuracy of the information presented herein or for the results of the positions takenbased on the opinions expressed above. The above-mentioned opinions are based on the information which is believed to be accurate and noassurance can be given for the accuracy of this information. There is risk of loss in trading in derivatives. The author, directors and other employeesof Karvy and its affiliates cannot be held responsible for any losses in trading.Commodity derivatives trading involve substantial risk. The valuation of the underlying may fluctuate, and as a result, clients may lose their entireoriginal investment. In no event should the content of this research <strong>report</strong> be construed as an express or an implied promise, guarantee orimplication by, or from, Karvy Comtrade that you will profit or that losses can, or will be, limited in any manner whatsoever. Past results are noindication of future performance. The information provided in this <strong>report</strong> is intended solely for informative purposes and is obtained from sourcesbelieved to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditionsare attempted.We do not offer any sort of portfolio advisory, portfolio management, or investment advisory services. The <strong>report</strong>s are only for informationpurposes and not to be construed as investment advice.For a detailed disclaimer please go to following URLs:http://www.karvycomtrade.com/disclaimer.asphttp://www.karvycomtrade.com/riskDisclaimer.asp