India is emerging as a preferred destination for global maize buyers as the commodity here is cheaper by 25% at $300 per tonne compared to the rates in the US, where the prices have sharply gone up due to its diversion for ethanol production. Other factors like proximity to importing countries are also giving India an edge over competitors like the US and China, which has placed some regulations on maize exports as well.

Traders said buyers from Pakistan, Australia and the Middle East are increasingly importing maize from India owing to the lower prices here compared to rates in other major markets.

Demand for Indian maize has surged owing to advantage in prices, which is less compared to that in the US, India-based representative of the US grains council Amit Sachdeva said. Maize prices in the US are ruling at $400 per tonne due to diversion of the crop for bio-fuel production. Since the start of marketing year from October 2007, India has exported about 2.5 million tonne of maize, especially to the South East and the Middle East countries, he added.

Marketing year for maize runs from October-September. Importing countries like Australia, which have been purchasing maize from the US and China so far, have switched their destination over to India lately due to their close proximity to the country and lesser freight cost in comparison to the US, all India starch manufacturers association president Amol S Sheth said. However, amid the rising export demand, domestic poultry and starch industry have sought a ban or some kind of curbs on maize exports. Maize is the major input for the starch industry.

Higher freight cost in the US due to a sharp increase in crude oil prices made imports costlier. Besides, Chinas export regulation on maize curtailed traders entry into the country. As a result, the demand for Indian maize has risen this year, he said.

According to traders, India is projected to export three million tonne of maize during 2007-08 against 0.5 million tonne in the same period last year. Mr Sheth, however, cautioned that increasing exports may disturb the supply-demand situation in the country in the next two months and suggested: India should follow China and regulate maize exports. Another factor which could boost exports is an expected bumper crop of maize this year. According to the official data, output is estimated to be up by over 22% at 18.54 million tonne.

However, market experts have a word of caution. They said India may slowly rise as a preferred market for maize importers but it needs to move at slower pace as carry-over stock is expected to slump in a big way causing supply constraint during lean period.