Corn Mumbai/IBNS: India's push to make more ethanol made from corn has turned the country, which was Asia's top corn exporter, into a net importer for the first time in decades, squeezing local poultry producers and scrambling global supply chains, Reuters reported.
According to the report, the surge in import demand comes after India in January this year increased the procurement price of corn-based ethanol to drive a shift away from sugarcane-based ethanol for blending in gasoline.
With the Indian government promoting ethanol in gasoline to reduce carbon emissions and trying to ensure ample supply of cheap sugar in the world's biggest market for the sweetener, the South Asian major appears set to become a permanent net importer of corn, reports Reuters.
The prospect of India gearing up corn imports is likely to support global prices which are trading near four-year lows.
Crushed by surging feed costs as local corn prices rise far above global benchmarks, India's poultry producers want the government to remove duties on imports and lift its ban on genetically modified (GM) corn, Reuters reported, adding that the prohibition severely limits their buying options.
The country usually exports 2-4 million metric tons of corn every year, but this year, exports are expected to drop to 450,000 tons while the country is set to import a record 1 million tons, mainly from Ukraine and neighbouring Myanmar, which grow non-GM corn, Reuters reported, citing traders' estimates.
The poultry and starch industries, traditionally, absorbed most of India's corn production of around 36 million tons.
However, in 2013, ethanol distilleries started using corn, and their demand grew this year after the government abruptly curbed the use of sugarcane for fuel following a drought, which led to a shortfall of 5 million tons, Reuters reported, quoting an official with the All India Poultry Breeders Association.
"Now, the poultry and starch industries are battling with distilleries to get their share of supplies, and this fight is keeping prices high," Nitin Gupta, senior vice president of Olam Agri India, told Reuters.
Olam Agri India estimates ethanol distilleries will need 6-7 million tons of corn annually, a demand that Gupta said can only be met with imports.
Traditional export markets such as Vietnam, Bangladesh, Nepal, and Malaysia, which bought corn from India, are now compelled to source supplies from South America and the US, as per reports.
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