Corn prices seen to hit P13/kilo on tight supply

Corn prices are expected to go up further and hit the resistance level of P13 per kilo in the coming weeks due to tight supply.

Philippine Maize Federation Inc. (Philmaize) president Roderico Bioco said the shortfall is estimated at 700,000 to one million metric tons (MT), the result of poor harvest brought about by unfavorable weather last year.

Prices of corn reached a recent high of P12.80 per kilo in Luzon, and about P10.50 per kilo in Mindanao.

"This is a good time for corn farmers since they are enjoying better value for their crop after two seasons of depressed prices," said Bioco, adding that on the average, corn prices will remain above P10 per kilo in Luzon and about P9.50 kilo in Mindanao."

In 2005, corn production slipped 2.95 percent to 5.25 million MT from a high growth of 17.28 or 5.41 million MT in 2004. The production shortfall was due to the dry spell in the first quarter of 2005 and the series of typhoons in the latter part of the year that caused massive flooding in certain corn-producing areas in the country.

Bad weather discouraged farmers from planting, resulting in the substantial reduction in the hectarage planted to corn last year. Of the total hectarage usually devoted to corn, only 30 percent was utilized.

Bioco noted that the shortfall for the year can be replaced by feed wheat and corn imports under the minimum access volume. Corn importation under MAV is assessed a 35-percent tariff.

For 2006, corn allocation for the private sector under MAV is about 217,000 MT while the government through the National Food Authority (NFA) is allowed to import up to 2,000 MT.

The inter-agency on rice and corn of the DA determines the specific MAV allocation for any given year.

Last month, the private sector placed an order for some 24,050 MT of Chinese corn at $139.44 per MT C&F.

The Philippine Association of Feed Millers Inc. (PAFMI) bought Tuesday last week the Chinese corn through the international trading house Bunge. The commodity is due to arrive not later than Feb. 15.

Local feed millers are complaining that the shortage in supply along with the poor quality of domestically raised corn has prompted them to seek their supply requirements from overseas suppliers.

The private sector is trying to bring in at least 150,000 MT of corn, but what they have brought in so far is about 24,050 MT of corn imports and some 60,000 to 70,000 of corn substitutes like feedwheat.