MUMBAI Dec 11 Indian corn futures are likely to remain rangebound this week, after rising over 2 percent in the previous week, as buying by feed and starch makers could offset rising supplies in spot markets amid lacklustre overseas demand.
Corn futures rose in the week ended Dec. 8, on short-covering after falling over 5 percent in the previous week as supplies improved in spot markets, following the end of the festive season.
"Stocks with corn-consuming industries such as starch and feed makers are very low, and they are buying to replenish stocks. This is supporting prices," said Poonamchand Gupta, a trader based in Nizamabad, Andhra Pradesh.
Corn supplies in local spot markets are rising as farmers accelerated harvesting to clear fields for planting winter crops, traders said.
Higher supplies are putting pressure on corn prices, but demand from starch makers and feed makers is very strong and it is offsetting the supply pressure to some extent, said Gupta.
"Traders do not expect prices to fall much rather they could remain rangebound this week," he added.
Corn stocks in India are low as a record high corn exports (around 4.8 million tonnes) in 2011/12 marketing year ended on Sept. 30. left little stocks with local traders.
Local prices have also found support from the projected decline in India's 2012/13 summer-sown corn output to 14.89 million tonnes, down from 16.22 million tonnes in the previous year, offsetting tepid overseas enquiries.
"Only exporters with long-term contracts are buying now, while others are staying away from market," said Gupta.
Most exporters are only willing to buy at less than $220 per tonne whereas corn in local spot markets is being traded at around $260 per tonne, traders said.
In Chicago, the key December corn contract on the CBOT was trading down 0.52 percent at $7.23 per bushel at 1017 GMT on Tuesday.
The contract fell over 4 percent in the previous three sessions to hit its lowest level in over three weeks.
The key January contract on the National Commodity and Derivatives Exchange (NCDEX) was trading down 1.36 percent at 1,448 rupees per 100 kg. ($6.8 per bushel)
The contract touched a three-month high on Nov. 24 as supplies in spot markets fell due to festivals.
Indian cottonseed oilcake, or kapashkhali, futures fell for the second session on Tuesday, and are likely to remain rangebound as below expectation cotton supplies in spot markets outweighed a fall in demand.
Kapashkhali is a by-product of cottonseed and is used as a cattle feed, mostly for dairy animals in northern India.
Kapashkhali prices are getting support from a 12.4 percent decline in cotton supplies in spot markets in the current crop year that started on Oct. 1, and that could offset a fall in demand.
"Easy availability of crop residue as fodder, after harvesting of summer-sowing crop, has cut demand for Kapaskhali, but lower supply of cotton is supporting prices," said Ranjeet Mankharia, a trader based in Bikaner, Rajasthan.
The key January contract on the NCDEX was trading down 0.5 percent at 1,405 rupees per 100 kg. ($1 = 54.5150 rupees) (Reporting by Deepak Sharma; Editing by Anand Basu)
Trending On Reuters
A long-awaited Indian bankruptcy code may soon win parliamentary approval, but struggling creditors – above all state banks trying to recover $100 billion in bad loans – shouldn't start celebrating just yet. Full Article | Factbox