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Maize Outlook Report

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Maize Outlook Report


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Maize Outlook Report

aize (Zea mays L) is one of the most important cereals of the world and provides
more human food than any other cereal. Maize is of American origin having been
domesticated about 7000 years ago. Maize provides nutrients for humans and
animals and serves as a basic raw material for the production of starch, oil and protein, alcoholic
beverages, food sweeteners and, more recently, fuel. Maize is high yielding, easy to process,
readily digested, and costs less than other cereals. It is also a versatile crop, allowing it to grow
across a range of agroecological zones. Every part of the maize plant has economic value: the
grain, leaves, stalk, tassel, and cob can all be used to produce a large variety of food and non-
food products.
Corn grown is majorly of three types
Grain or field corn,
sweet corn used mainly as food
Popcorn.

There are four types of Grain corn:
(1) Dent corn has a pronounced depression or dent at the crown of the kernels.
(2) Flint corn has the hard starch layer entirely surrounding the outer part of the kernel.
(3) Flour, or soft, corn contains almost entirely soft starch, with only a very thin layer of hard
starch.
(4) Waxy corn has a wax-like endosperm.

Popcorn has a very high proportion of hard starch. When heated, the moisture in the kernel
expands rapidly, resulting in an explosive rupture of the epidermis. The size of the kernel
increases from 15 to 35 times, after popping. Maize in India is an important cereal, and both its
area and production have steadily increased during the past two decades. Maize has varied
usages from food preparation to poultry feed. In India, it is mainly used in poultry feed
manufacturing.

Climatic requirements
Maize crop is grown in warm weather condition and it is grown in wide range of climatic
conditions. About 85% of the total acreage under maize is grown during mansoon because of the
fact that the crop stops growing if the night temperature falls below 15.60 C or 600 F.


M

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Maize Outlook Report
World Scenario
Maize is an important staple food in many countries of the world and the acreage and production
of maize in the world have been increasing continuously. Though the acreages have not been so
erratic, the production has been a bit volatile mainly due to the variations in the yield. The area
under the maize is continuously increasing over the years. If we examine production figures,
global maize production reached its high of 712 million tons during 2004-05.
World Area and Production of Maize
130000
132000
134000
136000
138000
140000
142000
144000
146000
148000
1
9
9
1
-
9
2
1
9
9
2
-
9
3
1
9
9
3
-
9
4
1
9
9
4
-
9
5
1
9
9
5
-
9
6
1
9
9
6
-
9
7
1
9
9
7
-
9
8
1
9
9
8
-
9
9
1
9
9
9
-
0
0
2
0
0
0
-
0
1
2
0
0
1
-
0
2
2
0
0
2
-
0
3
2
0
0
3
-
0
4
2
0
0
4
-
0
5
2
0
0
5
-
0
6
2
0
0
6
-
0
7
A
r
e
a

(
1
0
0
0

H
a
)
0
100000
200000
300000
400000
500000
600000
700000
800000
P
r
o
d
u
c
t
i
o
n

(
1
0
0
0

M
T
)
Area Production


The variations in production are mainly due to yield which is affected by a lot of factors. Factors
like Weather during crop growth, pest and disease attack, technological advances and
development of new hybrids and varieties affect the yield of corn.

The US has the largest harvested area of corn and contributes one fifth of the world corn
harvested area. China, Brazil, Mexico, India and Indonesia are the other countries which
contribute significantly to the world harvested area. These six countries have around 60% of the
world corn harvested area and the climatic conditions of these countries during the growth period
of corn affect the yield and in turn the supply of corn in the world.


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Maize Outlook Report
Share of Major Producers (2006-07)
United States
30%
China
15%
EU-25
14%
Brazil
4%
Others
25%
India
3%
Russian
3%
Mexico
3%
Canada
3%


If we examine the above graph, it is inferred that USA has the lions share in total global maize
production accounting for 30% of the production. Other major maize producers are China (15%),
EU 25 (14%), Brazil (4%) and India (3%).

World Balance Sheet
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Beginning
Stock (MMT)
192.90 173.15 149.57 125.43 103.23 130.45 127.08
Production
(MMT)
590.48 599.91 602.95 625.16 712.29 691.74 686.75
Consumption
(MMT)
608.39 621.48 625.86 646.37 684.08 696.73 721.19
Ending Stocks
(MMT)
173.15 149.57 125.43 103.23 130.45 127.08 91.21
Stock/Use
Ratio (%)
28.46 24.07 20.04 15.97 19.07 18.24 12.65

Global stock to use ratio is declining in the last three years indicating consumption is increasing
while production is not increasing in that pace. This indicates diversified usages of maize and it
acts as a substitute for other cereals.

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Maize Outlook Report
Domestic Supply Scenario

India is the fifth largest producer of maize in the world contributing 3% of the global production.
In India, maize is grown in all the seasons i.e., kharif, rabi and summer. Of these three seasons,
nearly 90% of the production is from kharif season, 7-8% during rabi season and remaining 1-
2% during summer season. Since the maize is rain dependent, it is mainly grown during kharif
season.

Growth of MAIZE in INDIA
6.31
10.85
1721
0
2
4
6
8
10
12
14
1950-51 1960-61 1970-71 1980-81 1990-91 1997-98
-300
200
700
1200
1700
2200
AREA (M.HECTS) PRODUCTION (M.TONNES) YIELD (KGS/HECT)

Maize Area, Production and Yield in India have seen a phenomenal growth over the last five
decades and India has emerged from being a net importer to levels of self sufficiency. In the last
five decades, Indias maize production has increased from less than 3 million tons to 15 million
tons today. This is because of growth in technology coupled with rising demand for the produce.
Diversified uses of maize also prompted higher production in the country. Presently, in India,
maize is mainly used for preparation of poultry feed and extraction of starch. Out of total arrivals
to the mandis nearly 75% of the produce is bought by the poultry feed manufacturers and 20% is
purchased by the starch extractors.


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Maize Outlook Report
Area, Production and Yield of Maize in India
0
2000
4000
6000
8000
10000
12000
14000
16000
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
1650
1700
1750
1800
1850
1900
1950
2000
2050
Area Harvested (1000 HA) Production (1000 MT) Yield (Kg/ha)


If we examine the production over the years, maize production in India is remained almost
stagnant with constant yield levels despite rise in acreage. Maize, like any other cereal is grown
across all the states in India and in many states it is one of the important staple foods. Karnataka
and Uttar Pradesh are the leading producers of maize in India while Andhra Pradesh, Bihar,
Madhya Pradesh and Rajasthan are the other important producers.

Share of Major Maize Producing States
Andhra Pradesh
17%
Rajasthan
14%
Madhya Pradesh
12%
Bihar
10%
Uttar Pradesh
9%
Karnataka
8%
Gujarat
6%
Others
24%


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Maize Outlook Report

Among the major producing states, Andhra Pradesh tops the list with the contribution of 17% to
the total Indian maize production. Other producers are Rajasthan (14%), Madhya Pradesh
(12%), Bihar (10%), Uttar Pradesh (9%), Karnataka (8%) and Gujarat (6%).

Seasonality of Maize in India
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Andhra Pradesh (K)
Andhra Pradesh (R)
Rajasthan (K)
Madhya Pradesh (K)
Bihar (K)
Uttar Pradesh (K)
Karnataka (K)
Karnataka (R)


Sowing

Harvesting

Indian Scenario during 2006-07
With the early onset of the South West Monsoon, maize sowing was started little earlier than
normal planting period. According to Union Ministry of Agriculture, as on 10
th
July 2006, area
brought under maize in India was 35.22 lakh hectares up from 27.36 lakh hectares planted
during the corresponding period last year. Higher acreage under the crop raised the hopes of
higher production this year.











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Maize Outlook Report
Price Analysis

For analyzing price trend, spot prices of Nizamabad was considered since Andhra Pradesh is
major maize growing region and major markets are located in this region. Apart from Nizamabad
in Andhra Pradesh, Davangere market in Karnataka also acts as a major market in the country.
Average Monthly Price of Maize in Nizamabad
400
450
500
550
600
650
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2003 2004 2005 2006

If we examine the price trend of maize in Nizamabad market, prices will be on their peak during
the months of April to June. From July onwards prices start declining owing to start of kharif
season. Looking at this trend we expect downward movement in maize prices during current
year.

Price of maize mainly depends upon supply demand structure. In the last few weeks, maize is
trading on higher side on account of supply demand mismatch. Food Corporation of India, which
procured maize under market intervention scheme, is not releasing the stocks to the market. This
created supply crunch resulting in surge in prices despite higher acreage under the crop.

We can expect fall in futures prices in the days ahead once the new produce start coming to the
market. We can expect futures to trade below Rs.600 per quintal in the months of August and
September.

Price Target
Based on the above mentioned fundamentals we expect futures prices to fall below
Rs.600 per quintal level during the months of August and September.