20% spike in maize prices due to supply-demand dynamics

Maize prices have surged by 20% since October due to reduced supply and increased demand from conventional sectors like livestock feed manufacturers, starch production, and ethanol manufacturing.

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Since October, maize prices have experienced a 20% uptick, driven by a combination of decreased supply and heightened demand from key sectors such as livestock feed production, starch manufacturing, and ethanol production.

In early October, the modal price of maize in Davangere, a prominent Southern market, was below the minimum support price (MSP) at approximately INR 1,850 per quintal. However, it has recently risen to around INR 2,309. Maize prices have also increased in other markets nationwide, and projections suggest a sustained upward trend. The MSP for the 2023-24 crop season stands at INR 2,090 per quintal.

The surge in maize prices is expected to impact the livestock feed sector. With the kharif harvest completed, arrivals are 25-27% lower due to the crop being affected by erratic monsoons, contributing to the current price escalation. Naveen Pasuparthy, Chairman of the Karnataka Poultry Farmers and Breeders Association (KPFBA), said that factory delivered prices of maize now range between INR 24,000-25,000 per tonne, compared to INR 21,000-22,000 a few months ago.

“Due to the drought, the maize yields were impacted hurting the production, while the demand for ethanol production has increased. Also, factors such as increase in prices of alternative grains such as bajra, ragi and rice have also contributed to the price rise” said MSR Prasad, General Secretary, Karnataka Poultry Farmers and Breeders Association. “We expect the prices to remain firm going forward” he added.