Despite drought, corn prices seen to be stable

MANILA, Philippines - Corn prices are expected to remain stable this year despite the loss of a substantial amount of the crop due to the ongoing drought, a ranking agriculture official said.

Gregorio Tan Jr., chairman of the Agricultural Commodity Exchange System (ACES) of the Department of Agriculture, the availability of imported feed wheat and corn would serve as ceiling for local corn prices.

“Traders can import feed wheat. Also, they can bring in corn from ASEAN countries at five-percent tariff. These will provide the ceiling for the domestic price of yellow corn,” he said.

Tan, a former National Food Authority (NFA) administrator however, said he foresees some difficulty in the government grains agency’s procurement of corn for buffer stocking.

The NFA is targeting to purchase 200,000 metric tons (MT) of clean and dried yellow corn from farmers at a support price of P13 per kilo. The government is also looking at the possibility of buying lower grade yellow corn, he said.

“The National Food Authority (NFA) will still procure (yellow) corn from farmers this year. The price is (pegged at) P12.30 plus (the incentive of) P0.70 per kilo,” Tan said.

Private traders, meanwhile, are buying yellow corn at P14 per kilo, he noted.

Last year, the DA’s corn procurement target was 600,000 MT of yellow corn to support corn prices at that time. The DA intervention was necessary when the domestic price of yellow corn declined due to the entry of duty-free feed wheat.

The Philippine Maize Federation Inc. (Philmaize) attributed the low price of yellow corn to the entry of more than one million tons of duty-free feed wheat.

The group had blamed Executive Order 765 which scrapped the seven percent duty on feed wheat.

The DA had set a buying price of P13 per kilo for the first tranche of 300,000 MT of yellow corn and P10 per kilo for the second tranche of 300,000 MT.

Corn procured by the NFA was offered to traders through ACES, a scheme which the DA had envisioned as a launchpad for a commodities exchange.