A seasonal report on Maize - Karvy Commodities Broking

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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%
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A seasonal report on Maize - Karvy Commodities Broking

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