Parameters for Performance Review of Commodity

MAIZE - FEED / INDUSTRIAL GRADE

1. Background

a. Brief about the commodity such as sample picture, lifecycle and various varieties/grade of
the commodity found in India

Maize (Zea mays) belongs to the grains family Graminae and is

known as Queen of Cereals due to its diverse uses. It is also called
as Corn. It occupies an important place in world agriculture, being
cultivated in more than 150 countries, including USA, China, Brazil,
Ukraine, Argentina and India. In India, Maize is the third most
important crop after rice and wheat. Maize has diversified uses and
widely used as human food, poultry feed, animal feed, industrial
(starch) products, beverages and seed. Maize requires moderate
climate for growth, excess or deficient rains adversely affect yields
as well quality. It grows well in loamy soils. Maize in India is grown in both Kharif and Rabi seasons.
Proportionate share of Kharif and Rabi season maize in total maize production remains around 70%
and 30%, respectively. In kharif, it is sown in June-July till mid-August and harvested from mid-
September. The important states are Karnataka, Andhra Pradesh, Maharashtra, Madhya Pradesh and
Uttar Pradesh. In Rabi, maize is grown mainly in Bihar, West Bengal, parts of Uttar Pradesh and coastal
region of Andhra Pradesh. The arrivals start from late March and extend up to June-July.

Crop Cycle (India)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Maize Kharif
Maize Rabi
Sowing Harvesting

Life Cycle: Major Varieties of Maize and NCDEX Quality

Value Chain of the Commodity Specifications
Major Varieties

KNMH-4010141, DMRH1301, CoH (M) 10, CoH

(M)8, DHM 121 (BH 41009), Pant Shankar
Makka-1, DHM 119 (BH 4062), Maize Hybrid
AH-58 (PEHM3)

NCDEX: Quality Parameters

Count Up to 400 grains per 100 grams

Moisture 14% max
Fungus 1% Max
Broken,
Damaged,
slightly
damaged,
8% max. Out of this weeviled
Discolored,
grains will be 0.5% max.
Immature
kernels and
Weeviled
grains.
Foreign Matter 2% max
Maize shall be free from any colouring agent,
moulds, live pests and obnoxious smell
Table: Reference Years for Commodities
Sl. No. A B C
Kharif
Crop Season Kharif Rabi
(Long Duration crop)
Paddy, Maize, Bajra,
Moong, Soybean, Guar Wheat, Barley, Chana, RM
Crops Castor and Turmeric
seed, Kapas, Sesame Seed, Coriander, Jeera
Seed
Guar gum, Soybean meal,
Relevant Processed
Soy oil, Cotton, Cotton Castor Oil -
commodities
seed Oil cake, Gur, CPO
Sowing Time July onwards July onwards October onwards
Harvesting Time Oct onwards Jan onwards March onwards
Reference Year
Financial Year 2021-22 (Apr-Mar)
Corresponding Years

Production Year (PY) 2021-22 (July-Sept) 2020-21(July-June) 2020-21(July-June)

Marketing Year (MY) 2021-22 (Oct-Sept) 2021-22 (Jan/Feb-Dec/Jan) 2021-22 (Mar/Apr - Feb/Mar)

Calendar Year (CY) 2021 (Jan-Dec) 2021 (Jan-Dec) 2021 (Jan-Dec)

Current Financial Year = Current Financial Year = Current Financial Year =
Relationship b/w Current Production Year = Previous Production Year = Previous Production Year =
Various Years Current Marketing Year = Current Marketing Year = Current Marketing Year =
Calendar Year Current Calendar Year Current Calendar Year
FY 2021-22 = PY 2021-22 FY 2021-22 = PY 2020-21 = FY 2021-22 = PY 2020-21 =
Example
= MY 2021-22 = CY 2021 MY 2021-22 = CY 2021 MY 2021-22 = CY 2021

Explanatory Notes:

 India is a vast country and various crops are sown and harvested at different point of time. However,
two major crop seasons, are there i.e. Kharif & Rabi. Apart from it, Zaid/Summer season is also
there.

 Crop seasons are classified based upon sowing time. Normally Kharif season sowing starts from
mid-June/July and new crop arrivals begin from Oct/Nov. However, early/late sowing/harvesting
also takes place. Rabi season sowing usually takes place mainly from October/November and
harvesting starts from March/April. Early/late sowing/harvesting also takes place. Summer
crops/Zaid crops are short duration crops mainly sown during January-March and harvested during
April-June.

 “Production Year” is considered as “July to June”. With the start of monsoon rains during June/July
the sowing of Kharif season starts and they are harvested during Sept/Oct. From Oct onwards the
sowing of Rabi season crops starts and harvesting usually takes place during March/April. Thus, a
single production cycle completes between July-Sept period covering Kharif, Rabi and Zaid crops.
Thus production year remains same for all season crops and the period corresponds to July-Sept.

 “Marketing Year” for each crops starts from beginning of the harvest time i.e. from start of new crop
produce arrivals in the market. Thus, for Kharif crops Marketing Year is generally considered as
“October to September”, while for Rabi crops Marketing Year is considered as “April to March”.
However, Marketing Year may vary slightly for some of the crops depending upon early/late
maturity/harvesting.

 For processed commodities, their production starts after the start of new season crop arrivals of
their underlying crop.
b. Commodity fundamentals and balance sheet as per the following format (to be prepared
based on publicly available information on best effort basis):

Table - Fundamentals & Balance sheet (quantity)

(In Lakh Tonnes)

Previous FY Current FY
Global Scenario
(2020-21) (2021-22)
Opening Stocks 3064 2922
Production 11259 12105
Imports 1856 1821
Total Supply 16179 16847
Exports 1821 1970
Domestic Consumption 11436 11822
Closing Stocks 2922 3055
Source: USDA

(In Lakh Tonnes)

Previous FY Current FY
Indian Scenario
(2020-21) (2021-22)
Opening Stocks 18.63 20.95
Production 316.47 325.00
Imports 0.25 0.25
Total Supply 335.35 346.20
Exports 35.90 33.00
Domestic Consumption 278.50 293.00
Closing Stocks 20.95 20.20
Source: USDA
Please refer to Table entitled “Reference Years for Commodities” to know type of years corresponding
to financial year.

(In Lakh Tonnes)

Top 10 Major Producing Countries Top 10 Major Consuming Countries
Rank Previous FY Current FY Previous FY Current FY
Country Country
(2020-21) (2021-22) (2020-21) (2021-22)
1 United States 3584 3839 United States 3065 3159
2 China 2607 2726 China 2850 2910
3 Brazil 870 1160 European Union 774 798
4 European Union 671 705 Brazil 695 730
5 Argentina 520 530 Mexico 438 442
6 Ukraine 303 419 India 279 293
7 India 316 325 Canada 140 166
8 Mexico 273 276 Egypt 164 162
9 South Africa 170 163 Japan 155 157
10 Russia 139 152 Vietnam 165 157
Others 1805 1809 Others 2712 2850
World Total 11259 12105 World Total 11436 11822
Source: USDA
Countries are arranged in descending order based on the figure in Current FY
 (In Lakh Tonnes)
Top 10 Major Exporting Countries Top 10 Major Importing Countries
Previous FY Current FY Previous FY Current FY
Rank Country (2020-21) (2021-22) Country (2020-21) (2021-22)
1 United States 699 635 China 295 230
2 Brazil 210 445 Mexico 165 173
3 Argentina 409 390 Japan 155 156
4 Ukraine 239 230 European Union 145 150
5 European Union 37 49 Korea, South 117 117
6 Russia 40 45 Vietnam 135 100
7 India 36 33 Egypt 96 97
8 South Africa 35 32 Iran 72 85
9 Burma 19 18 Colombia 58 60
10 Canada 15 18 Taiwan 44 45
Others 82 75 Others 574 608
World Total 1821 1970 World Total 1856 1821
Source: USDA,
Countries are arranged in descending order based on the figure in Current FY

(In Lakh Tonnes)

Top 10 Major Producing States in India
Previous FY Current FY*
Rank States (2019-20) (2020-21)
1 Karnataka 42.58 53.62
2 Madhya Pradesh 40.70 38.82
3 Maharashtra 19.60 35.20
4 Tamil Nadu 24.76 25.65
5 West Bengal 20.08 24.36
6 Rajasthan 12.07 22.70
7 Bihar 20.03 20.84
8 Uttar Pradesh 16.94 18.18
9 Andhra Pradesh 20.17 17.81
10 Telangana 30.00 17.57
Others 40.74 41.73
All India 287.66 316.47
Source: Ministry of Agriculture; *Data for Latest year i.e. FY 2021-22 is not available.
States are arranged in descending order based on the data in the Current Year
Please refer to Table entitled “Reference Years for Commodities” to know type of years corresponding
to financial year.

c. Major changes in the polices governing trade in the spot markets of the commodity

Date Major Policies governing trade and related changes

Ministry of Agriculture released Third Advance Estimates of Production of Food grains for
25-May-21 2020-21 and estimated Maize Production for 2020-21 at 302.4 lakh tonnes which is 5%
higher as compare to 287.7 lakh tonnes during the last year.
Cyclone Yaas, ravaged Bihar for two days on May 27 and 28, leading heavy rains with
26-May-21 strong winds. Officials of the agriculture department said that maize crops were damaged
extensively in the cyclonic rains.
The Prime Minister in his address to the nation on 7th June 2021, announced the extension
of the PMGKAY (2021) Scheme for a further period of five months still Diwali in November,
2021. An additional allocation of 5 kg of foodgrains(Wheat or Rice), free of cost, involving a
07-Jun-21 total quantity of around 204 LMT of foodgrains for a period of further 5 months will be
provided to around 80 Crore NFSA beneficiaries with an estimated financial implication of up
to Rs. 67,266Crore. This additional free of cost allocation of food grains will be over and
above the regular monthly food grains allocated for beneficiaries covered under the NFSA.
 The entire cost of this additional allocation under PM-GKAY,including the expenditure on
intra state transportation, dealers’ margin etc., will be borne by Government of India without
any sharing by States/UTs.
Govt. announced MSP for Kharif crops for marketing season 2021-22. Maize MSP has been
09-Jun-21
increased by 1.08% y-o-y from Rs 1850/Qtl. to Rs 1870/Qtl.
Ministry of Agriculture released fourth Advance Estimates of Production of Food grains for
11-Aug-21 2020-21 and estimated Maize Production for 2020-21 at 315.1 lakh tonnes which is 10%
higher as compare to 287.7 lakh tonnes during the last year.
20-Nov-21 Farm laws repealed: Govt. announced repealing of three farm laws after a year of protests.
The central govt. has approved the extension for the Pradhan Mantri Garib Kalyan Anna
Yojana (PMGKAY-Phase V) for a period of another 4 months i.e. December 2021 till March
2022 @ 5 kg per person per month free of cost for all the beneficiaries covered under the
National Food Security Act (NFSA) [Antodaya Anna Yojana & Priority Households] including
those covered under Direct Benefit Transfer (DBT). Phase-I and Phase-II of this scheme
24-Nov-21 was operational from April to June, 2020 and July to November, 2020 respectively. Phase-III
of the scheme was operational from May to June, 2021. Phase-IV of the scheme is currently
operational for July-November, 2021 months. The PMGKAY scheme for Phase V from
December 2021 till March, 2022 would entail an estimated additional food subsidy of Rs.
53344.52 Crore.The total outgo in terms of food-grains for PMGKAY Phase V is likely to be
about 163 LMT.
Farm Law Repeal Act 2021 received the assent of the President of India. This is an Act to
repeal the Farmers (Empowerment and Protection) Agreement on Price Assurance and
30-Nov-21 Farm Services Act, 2020, the Farmers' Produce Trade and Commerce (Promotion and
Facilitation) Act, 2020, the Essential Commodities (Amendment) Act, 2020 and to amend the
Essential Commodities Act, 1955.
Ministry of Agriculture released second Advance Estimates of Production of Food grains for
16-Feb-22 2021-22 and estimated Maize Production for 2021-22 at 324.1 lakh tonnes which is around
2% higher as compare to 316.5 lakh tonnes during the last year.
The government has revised the Open Market Sale Scheme (OMSS) of foodgrains for bulk
05-Mar-22 consumers and private traders by restoring transportation charges that were waived last
year due to the COVID-19 pandemic, Food Secretary Sudhanshu Pandey said
The central govt. extended the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY)
scheme for another six months i.e., till September 2022 (Phase VI). Under the extended PM-
GKAY each beneficiary will get additional 5 kg free ration per person per month in addition
26-Mar-22 to his normal quota of foodgrains under the NFSA. the Government had allocated about
759 LMT of free foodgrains under the PM-GKAY till Phase V. With another 244 LMT of free
foodgrains under this extension (Phase VI), the aggregate allocation of free foodgrains
under the PM-GKAY now stand at 1,003 LMT of foodgrains.

d. Geo political issues in the commodity and its impact on Indian scenario.

Date Event Key Details Key Implications/Impact

23-Mar-21 Suez Canal The Suez Canal, a critical shipping Supply Chain bottleneck with container
traffic jam artery that connects the shortage and port congestion. Freight
between 23 Mediterranean and Red Seas through rate hike.
March to early Egypt, was blocked after a large cargo
hours of 29 ship ran aground while passing The congestion of the Suez Canal may
March caused through it bringing traffic on the busy delay nearly 7% of seaborne U.S. major
by stuck ship trade route to a halt. grain shipments, according to USDA
and vessel data analysed by
Bloomberg. More than 80% of the
impacted grain shipments are corn, with
close to 60% of it on six vessels headed
to China. However, Moderate effect on
prices were observed as this Jam was
temporary in nature.
24-Feb-22 Russia’s Russian President Vladimir Putin on Russia’s invasion on Ukraine has
Invasion on Feb 24, 2022 informed that he has raised supply concern for wheat, corn
Ukraine and edible oil supply in the Global
 launched a military operation in market. Further. it is feared that it may
Ukraine. lead to a food crisis on the global scale.
Ukraine is the largest source for
sunflower oil import in India. Further,
Russia and Ukraine are key source of
world wheat product and trade. Prices
of edible oils and grains are feared to
get impacted from it.
Ongoing China imposed China Imposes Lockdown In Largest Agriculture commodity export to China
since Mar lockdown City- Shanghai Amid Biggest has slowed down due to prevailing
28, 2022 Outbreak Of COVID In 2 Years lockdowns

2. Trading Parameters

a. Monthly and Annual traded volume (quantity in appropriate units)

Month Traded volume (MT)

Apr-21 100
May-21 0
Jun-21 0
Jul-21 0
Aug-21 0
Sep-21 0
Oct-21 0
Nov-21 0
Dec-21 0
Jan-22 0
Feb-22 0
Mar-22 150
Annual Traded Volume 250

b. Annual traded volume as proportion of total deliverable supply (quantity in appropriate

units)

Traded volume (MT) Deliverable supply( MT) Proportion

MAIZE 250 3,46,20,000 0.00%

c. Annual traded volume as proportion of total annual production (quantity in appropriate

units)

Traded volume (MT) Production( MT) Proportion

MAIZE 250 3,25,00,000 0.00%

d. Annual average Open interest as proportion of total production

Avg Open Int(MT) Production( MT) Proportion

MAIZE 735 3,25,00,000 0.00%

e. Annual average Open interest as proportion of total deliverable supply

Avg Open Int(MT) Deliverable supply( MT) Proportion

MAIZE 735 3,46,20,000 0.00%
f. Monthly and Annual value of trade (in Rs. Crores)

Month Traded Value(in Cr.)

Apr-21 0.03
May-21 0
Jun-21 0
Jul-21 0
Aug-21 0
Sep-21 0
Oct-21 0
Nov-21 0
Dec-21 0
Jan-22 0
Feb-22 0
Mar-22 0.14
Yearly 0.02

g. Monthly and Annual quantity of delivery (in appropriate units)

Month Total Delivery* (MT)

Apr-21 0
May-21 100
Jun-21 700
Jul-21 120
Aug-21 0
Sep-21 0
Oct-21 0
Nov-21 0
Dec-21 980
Jan-22 370
Feb-22 820
Mar-22 370
Annual 3,460
*Delivery details are based on commodity and not type of derivatives. Hence they will be same at
commodity level

h. Monthly and Annual value of delivery (in Rs. Crores)

Month Total Delivery* (Cr)

Apr-21 0
May-21 0.15
Jun-21 1.06
Jul-21 0.22
Aug-21 0
Sep-21 0
Oct-21 0
Nov-21 0
Dec-21 1.67
Jan-22 0.71
Feb-22 1.65
Mar-22 0.85
Annual 6.3
*Delivery details are based on commodity and not type of derivatives. Hence they will be same at
commodity level
i. Monthly and Annual Average Open Interest (OI) (in appropriate units)

Month Avg Open Int (MT)

Apr-21 829
May-21 800
Jun-21 0
Jul-21 0
Aug-21 0
Sep-21 0
Oct-21 0
Nov-21 0
Dec-21 0
Jan-22 0
Feb-22 0
Mar-22 150
Yearly 734

j. Annual average volume to open interest ratio

Volume to OI Ratio
0.01
k. Total number of unique members and clients who have traded during the financial year

Member Count Client Count

2 3

l. Ratio of open interest by FPOs/farmers/Hedge/VCP positions to total open interest (Annual

average as well as maximum daily value)

VCPs/ Hedger
Annual Average 49%
Maximum Daily value*
*It is calculated on the day when commodity has highest open interest during the year.
Commodity wise client categorization is as per category details as provided by the members.

m. Number of unique FPOs / farmers and VCPs/hedgers who traded in the financial year

Commodity Count
MAIZE 2
Commodity wise client categorization is as per category details as provided by the members.

n. Algorithmic trading as percentage of total trading

Commodity %
MAIZE 0

o. Delivery defaults

Number of Instances 0
Quantity involved (MT) 0
Value Involved (Cr) 0
3. Price movements

a. Comparison, correlation and ratio of standard deviation of Exchange futures price vis-à-vis
international futures price* (wherever relevant comparable are available).

Correlation Standard Deviation

Futures Spot Int'l Price Futures Spot Int'l Price
Futures 1 NA NA Futures 1 0.681746 1.328622
Spot 0.528101 1 NA Spot 1.466822 1 1.948851
Int'l Price 0.088998 -0.055101 1 Int'l Price 0.75266 0.513123 1

*CME Corn futures is considered for International futures price

b. Comparison, correlation and ratio of standard deviation of Exchange futures price vis-à-vis
international spot price* (wherever relevant comparable are available) and domestic spot price
(exchange polled price).

NA

c. Correlation between exchange futures & domestic spot prices along with ratio of standard
deviation.

Correlation Standard Deviation

Futures Spot Int'l Price Futures Spot Int'l Price
Futures 1 NA NA Futures 1 0.681746 1.328622
Spot 0.528101 1 NA Spot 1.466822 1 1.948851
Int'l Price 0.088998 -0.055101 1 Int'l Price 0.75266 0.513123 1

d. Correlation between international futures & international spot prices along with ratio of standard
deviation (wherever relevant comparable are available).

NA

e. Comparison of Exchange polled price and mandi price (in case of agricultural commodities) /
other relevant price (in case non-agricultural commodities) at basis center.

Correlation Standard Deviation

Futures Spot Int'l Price Futures Spot Int'l Price
Futures 1 NA NA Futures 1 0.681746 1.328622
Spot 0.528101 1 NA Spot 1.466822 1 1.948851
Int'l Price 0.088998 -0.055101 1 Int'l Price 0.75266 0.513123 1
 Price Comparison
2400 900
2200 800
700

Corn Int'l Price

2000
1800 600
Price

500
1600
400
1400 300
1200 200
1000 100
800 0

Date

Futures Spot Corn Int'l Prices

Comparison of Maize International Futures, Domestic Futures, Spot

f. Maximum & Minimum value of daily futures price volatility and spot price volatility along with
disclosure of methodology adopted for computing the volatility. (Volatility calculated by
Standard Deviation of daily returns for the period from 1 April 2021 to 31 March 2022)

Futures Spot
Volatility
Month Value Month Value
Max Jul 0.031 Nov 0.017
Min Oct 0.008 May 0.006

g. Number of times the futures contract was in backwardation/contango by more than 4% for the
near month contract in the period under review

MAIZE
Contango 16
Backwardation 0
4. Other Parameters

a. Qualitative and quantitative measure for Hedge effectiveness ratio (Methodology in Annexure I)
and basis Risk (Volatility of Basis) along with disclosure of methodology adopted for such
calculations. (Volatility calculated by Standard Deviation of daily returns for the period from 1
April 2021 to 31 March 2022)

Basis Volatility 9.92702

Hedge Efficiency

b. Details about major physical markets of the commodity vis-à-vis market reach in terms of
availability of delivery centres (information to be provided state-wise and UT-wise).

Availability of NCDEX
State Major Physical Markets
Delivery center
Nizamabad ADC
Warangal
Telangana Karimnagar
Mahboobnagar
Khammam
Kurnool
Andhra Pradesh
Vizianagram
Naugachhia
Gulabbagh Basis/ ADC
Bihar
Khagaria
Purnea
Koppal
Davangere
Ranebennur
Karnataka Bagalkot
Gadag
Hubli
Shimoga
Sangli ADC
Maharashtra Jalgaon
Aurangabad
Madhya Pradesh Chhindwara Basis / ADC
Khanna
Punjab
Ludhiana
Tamil Nadu Namakkal
Delhi Delhi
Gujarat Ahmedabad
West Bengal Kolkatta

c. Details about major physical markets of the commodity and average Open Interest for each month
generated

Note – The OI for each month is classified based on the Member level. The Average OI is on
gross level (Long OI + Short OI)

Month DELHI MAHARASHTRA

Apr-21 1628 100
May-21 1600 0
Jun-21 0 0
Jul-21 0 0
Aug-21 0 0
Sep-21 0 0
 Oct-21 0 0
Nov-21 0 0
Dec-21 0 0
Jan-21 0 0
Feb-21 0 0
Mar-21 150 150
"Note - The OI for CP is not mapped to any State/ location and hence not considered in the above data."

d. Details, such as number and target audience, of stakeholders’ awareness programs carried out by
the exchange.

Following is the list of Awareness program, Stakeholder engagement program exchange has conducted
for FY 2020-21. Due to the pandemic, all the programs were conducted on virtual platforms.

IEP/ RS Category Number of Participants

Investor Education Program All market participants 18
Investor Education Program All market participants 12
Investor Education Program All market participants 35
Investor Education Program All market participants 68
Investor Education Program Maize VCP 30
Investor Education Program Maize VCP 29
Investor Education Program Maize VCP 38
Investor Education Program All market participants 50
Investor Education Program All market participants 48

e. Steps taken / to be undertaken to improve hedging effectiveness of the contracts as well as to

improve the performance of illiquid contracts.

 Creating awareness about hedging and targeting the major Masala processors/ Traders/
Stockiest
 Awareness Programme in major trading centres as well as remote location
 One to one meeting with market participants and hedgers
ANNEXURE I

Qualitative and quantitative measure for Hedge effectiveness ratio

Hedging Efficiency Methodology

Regression analysis is carried out between near month futures returns and NCDEX polled spot prices
returns of the FY2021-22.

The R-Square value of the Regression analysis represents the “Hedging Efficiency”.

Note: -

Date for which spot prices were not available is not used for analysis.

Weekly returns are used for performing Regression Analysis.

The method used to calculate Hedging Efficiency does not consider liquidity risk because of this
reason illiquid commodities can have high hedging efficiency.

References:

Ghosh, Ph.D, Nilanjan & Dey, Debojyoti & Moulvi, Nazir & Jain, Niteen & Sinha, Neha & Rachuri,
Sarika. (2013). Hedging Efficiency—Measures and Empirical Study.