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More than 100,000 tonne of Indian corn set to be exported to Southeast Asian countries has been rejected at local ports due to the poor quality of grains, three trade sources said. After the weakest monsoon in 37 years had reduced crop output, unseasonal rains during the harvesting then damaged grains beyond quality limits for exports, traders said.
"There have been quality issues this time... some export containers have been rejected before loading," said an official with Kakinada port in southern Andhra Pradesh state, which handles much of India's corn exports. The official, who spoke on condition of anonymity, would not discuss the affected volume of exports, but other sources said it was at least 100,000 tonnes.
India sells around 2 to 3 million tonnes of corn a year, out of global trade of around 80 million tonnes, and is an important supplier for Asian buyers seeking prompt shipment. "Large amount of the commodity has been rejected even before exports could be loaded," said an official with an international grains association, who declined to be identified.
Malaysia, Philippines and Vietnam are major buyers of Indian corn. "Earlier, Southeast Asian importers will reject poor products at the port of delivery... now they are employing independent quality control guys to find out at the Indian ports," said a trader with a multinational grain exporter. Industry players expect export buyers to avoid the Indian market in the near future given the absence of quality offerings.
"Exporters are not actively buying due to quality issues. Damaged grain percentage is very high this year," said Punam Chand Gupta, a broker based in Nizamabad, Andhra Pradesh. The rejected export shipments were likely to be offered to Indian poultry feed producers at discounted price, he said. Spot corn price in Nizamabad spot market has fallen over 4 percent in last fortnight to 916.7 rupees ($19.7) per 100 kg.
If quality issues persist, prices would remain under pressure in the medium term despite the drop in the production, said Chowda Reddy, an analyst with JRG Wealth Management Ltd The output of India's summer-sown corn crop is expected to slide 9.3 percent to 12.61 million tonnes due to patchy monsoon rains, according to the government's latest estimates.

Copyright Reuters, 2010

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