India May Ban Corn Exports on Drought

India may ban corn exports for a second season to boost local supplies as the crop wilts under the driest monsoon in seven years, the U.S. Grains Council said.

"A ban is a real possibility if prices rise further," Amit Sachdev, India representative of the U.S. Grains Council, said in a telephone interview from Gurgaon, near New Delhi.

A halt in corn shipments from the South Asian country may boost sales for U.S. and Latin American suppliers, supporting prices that have fallen 45 percent in the past year. A drought in 40 percent of India's 626 districts may lower output in the world's second-biggest producer of rice, sugar and wheat.

"The crop has been hit by lack of rains and it's bound to affect productivity," Sachdev said. "It's a bit too early to say how much the output will decline."

India sells corn mostly to animal feed makers in countries including Malaysia, Indonesia, Vietnam and Thailand. Shipments have totaled 1 million tons since the four-month ban on exports was lifted on Oct. 15.

Overseas sales were banned in July last year after prices surged. Curbs ended after output reached a record 19.3 million metric tons, including a summer crop of 13.9 million tons.

"It's quite possible the government becomes cautious about the overall supplies and bans corn exports," said Vijay Iyengar, managing director at Agrocorp International Pte. from Singapore. "We have reasonable stockpiles of rice and wheat, but not for many other commodities."

The government has purchased a record 30 million tons of rice and 25.1 million tons of wheat from farmers this year.

Mumbai Prices

Farmers planted corn to 6.75 million hectares as of Aug. 12 compared with 6.59 million hectares a year earlier, according to the farm ministry. Prices have jumped 20 percent on the National Commodity & Derivatives Exchange Ltd. in Mumbai in the past six months on speculation below average rains will reduce production.

In Chicago, corn for December delivery dropped 1.3 percent to $3.3125 a bushel at 10:23 a.m. Mumbai time. In India, futures for September delivery declined as much as 1 percent to 982.50 rupees ($20) per 100 kilograms on the National Commodity & Derivatives Exchange Ltd.

Prime Minister Manmohan Singh's government halted exports of rice under so-called government-to-government accords last month to meet shortages caused by inadequate rains. Last week, Finance Minister Pranab Mukherjee said the country may import food items such as edible oils and lentils to meet any deficit.

Monsoon Revives

To be sure, rains have returned, narrowing the deficit to 2 percent in the week ended Aug. 19 compared with 56 percent in the previous week, the weather office said Aug. 20.

"Rains in the past few days have considerably improved moisture levels, and the winter crop should be fairly good," Atul Chaturvedi, president at Adani Enterprises Ltd., India's biggest trader of farm goods, said by telephone from Ahmedabad. "I don't see any reason for the government to panic."

Trade Secretary Rahul Khullar wasn't immediately available for comment. The government isn't considering a ban on exports of corn and soybean meal, NDTV Profit television reported Aug. 18, citing Khullar