OUTLOOK-India corn seen hitting new high on export demand

MUMBAI, July 20 (Reuters) - Indian corn futures are likely to edge higher and hit a new contract high next week as traders rush to secure supplies to meet strong overseas demand after a surge in global prices.

Lower rains in key growing areas, which could trim sowing, is also pushing the price up in the local market.

U.S. corn also jumped to an all-time high on Thursday, rising above $8 a bushel as the worst drought to hit the U.S. Midwest in 56 years continues to curb grain yields.

"Demand for Indian corn has risen due to a recent surge in the global prices. Though prices have risen in the local market also but it is still attractive to export," said Vijay Shrishrimal, managing director of K.N. Resources Pvt Ltd.

India's monsoon rains lost momentum again last week, falling nearly a fifth short of averages and raising the risk of a drought year.

At 1010 GMT, the key August contract on the National Commodity and Derivatives Exchange (NCDEX) was trading up 1.69 percent at 1,565 rupees per 100 kg, earlier in the day it hit a fresh record high at 1,586 rupees.

In the Nizamabad spot market, corn, primarily used as poultry feed, rose 4 rupees to 1,322 rupees per 100 kg.

KAPASKHALI OR COTTONSEED OILCAKE

Indian cottonseed oilcake, or Kapaskhali futures are likely to rise on lower rains, which boosted the demand for the animal feed.

The key August contract on the NCDEX was trading up 1.79 percent at 1,652 rupees per 100 kg.

Demand for oilcake, mainly used as a cattle feed, usually goes down with the beginning of rainy season due to availability of green fodder.

"This year, poor rains in north India has raised concerns over the availability of fodder and it is pushing the prices of oilcake," said a trader based in Dilbag Singh Ludhiana, Punjab.

Firmness in price of cotton on fears that patchy rains could trim the fibre output in the next season is also supporting the higher prices.

Kapaskhali is a by-product of cottonseed and used as cattle feed mostly in the north-western states of India.

At Akola, a key market in Maharashtra, cottonseed oilcake rose 2 rupees to 1,590 rupees per 100 kg.

NCDEX has imposed a 20 percent special margin on the long side of cottonseed oilcake contracts, effective Saturday. (Reporting by Deepak Sharma; Editing by Anand Basu)