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India Witnesses a 20% Surge in Maize Prices as Government Shifts Focus to Ethanol Production

Navigating India's Maize Market: Unraveling the Surge in Prices Amid Government's Ethanol Embrace

Maize prices in India have seen a notable 20% increase in the initial weeks of January compared to October. This surge is attributed to heightened demand following the government’s initiative to procure maize for ethanol production, particularly as restrictions on using sugar for biofuel production take effect.

Trade estimates reveal that maize prices have risen to Rs 2,366 per quintal in Gulabbagh, Bihar, and feed-grade maize prices have reached Rs 2,400 per quintal in Ahmedabad, Gujarat.

Anticipating a sustained demand, Gopal Sharma, a maize trader from Begusarai in Bihar, suggests that prices are likely to remain firm in the upcoming months, and there could even be a potential shortage of the commodity.

The Indian government is actively promoting maize as a substitute for sugar to enhance ethanol production and maintain a steady supply of the sweetener in the market. December saw the government instructing sugar mills to refrain from using cane juice for ethanol production, considering the expected decline in sugar production during the 2023-24 marketing year.

Traders indicate that the estimated maize production of 35.91 million tonnes for 2022-23, as per the agriculture ministry’s third advance estimate, may fall short of meeting demand as distilleries gear up for ethanol production.

Unfavorable weather conditions resulted in a 25-27% lower kharif harvest in certain regions due to erratic and scanty rainfall during the season.

To address potential shortages, the government plans to procure maize federally, leading to increased cultivation. Rabi sowing of the cereal has expanded by 4%, reaching 20.51 lakh hectares by January 12 across major states.

With an aim to boost ethanol production and cater to rising demands from the poultry industry, India is targeting a 10 million-tonne increase in corn production over the next five years. The poultry sector, a significant consumer of maize as feed, has also sought duty-free imports to meet future demands.

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