Corn prices surge in anticipation of low output in H1

Corn prices are expected to breach the P11 per kilo mark as domestic production is expected to be lower by 12 percent in the first half of the year compared to last year due to the devastating effects of the strong typhoons last December which was made worse by the dry spell brought about by the El Niño weather phenomenon.

Philippine Maize Federation Inc. president Rod Bioco said corn production for the first semester of 2005 is projected to decline by about eight percent to 2.3 million (MT) from the original target of 2.5 million MT.

The Department of Agriculture (DA) has earlier projected production for 2005 to reach 5.2 million MT.

"It will be very difficult to meet the full year target unless there is a dramatic surge in production," said Bioco.

"Our corn farmers are reporting a steady increase in prices, especially in key-corn producing areas in Luzon like Bulacan and Batangas, and in Isabela and the Cagayan Valley," said Bioco.

Bioco noted that from January to March, corn prices in northern Luzon region firmed up by from P7.50 per kilo to P9.50 in February and P10.50 per kilo last month.

He said corn production in the Isabela and Cagayan Valley regions for the dry season started only last January as farmers waited for waters in the more productive lowland areas to subside.

However, the standing crop was later affected by the dry spell caused by the El Niño, causing lower yields in planted areas, both in lowland and upland areas.

Bioco said the shortfall in Luzon production could not be offset by corn harvested in Mindanao because the crop is distributed to the entire region and in the Visayas.

Aside from the adverse effects of the typhoons and the El Niño, corn farmers were also discouraged from expanding their corn areas because of higher production costs.

Petroleum-based chemical fertilizers prices for the last two years increased by about 50 percent with urea prices now averaging about P965 per 50-kilo bag due to continuous surges in crude oil prices. This also drove transport costs from Region I and Region II to rise by 50 to 70 centavos per kilo.

Bioco said that local corn prices will remain high unless there is a dramatic surge in production.

Despite high corn prices, Bioco said local feedmillers are likely to resort to domestic buying because world prices of cornfeed substitutes such as feedwheat, and soybean meal are still more expensive than local corn supply.

He noted that imported feedwheat at seven percent tariff has a landed price of P11-12 per kilo while soybean is now at the level of P16 per kilo.

Corn is used as a raw material by feedmillers in the manufacture of feedmeal and is distributed to the livestock, poultry and aquaculture sectors.