July 3 (Bloomberg) -- India banned corn exports and curbed shipments of steel, seeking to boost domestic supplies and cool the fastest inflation in 13 years as world commodity prices soar.

Corn futures plunged by the daily limit in Mumbai after the trade ministry said it would halt overseas sales by the world's sixth-biggest supplier until Oct. 15. Tata Steel Ltd. led a plunge in steel shares after producers agreed to cut some exports.

India's corn ban adds to curbs on exports of rice, wheat and cooking oil as the government seeks to tame price increases that have driven interest rates to a six-year high and stoked social unrest. The nation increased corn shipments more than sixfold in the past year as the global price doubled.

``Global corn prices are certain to look up,'' said Atul Chaturvedi, president at Adani Enterprises Ltd., India's biggest exporter of farm products, in a phone interview. ``Supplies are tight globally and Indian corn was a welcome relief for most buyers in Southeast Asia.''

Corn futures for December delivery dropped 1 percent to $7.7275 a bushel in after-hours trading on the Chicago Board of Trade. Earlier, prices fell as much as 1.6 percent. Corn touched a record $7.9925 on June 27 as the worst flooding in the U.S. Midwest since 1993 damaged fields.

In India, corn for July delivery fell 4 percent to 931.50 rupees per 100 kilograms on the National Commodity & Derivatives Exchange Ltd. Corn gained 40 percent this year before today.

Shipments from India totaled a record 2.5 million tons in the year ended June 30 as feed makers in Southeast Asia sought cheaper alternatives to supplies from the U.S., the biggest exporter. Exports were 400,000 tons in the previous year.

Global Harvest

World corn output in the crop year that begins Oct. 1 will total 775.3 million tons, down from 789.8 million estimated for this year, according to the U.S. Department of Agriculture.

India's corn exports may reach 1.5 million tons in the year beginning October, the USDA said. Contracts for 500,000 tons may not be executed because of the ban, said Manish Gupta, managing director at Gujarat Ambuja Exports Ltd.

``The ban will make everyone involved in exports bleed,'' he said by telephone from Ahmedabad in western India.

Record food prices have led to strikes in Argentina and sparked riots in more than 30 developing countries. The United Nations in April said higher prices for staples ranging from corn and rice to wheat and palm oil are ``threatening to plunge more than 100 million people on every continent into hunger.''

Steelmakers agreed today to cut exports of hot-rolled coils to bolster local supplies, Sajjan Jindal, Managing Director of JSW Steel Ltd., India's third-biggest producer, told reporters after a meeting with government officials. The companies, who agreed to freeze prices for three months after lowering them by 10 percent in May, may not raise prices next month, he said.

Stocks Slump

Tata Steel, India's biggest steelmaker, slumped 11.5 percent to 656 rupees while Steel Authority of India Ltd., the second- biggest, plunged 11.7 percent to 125.3 rupees at close of trade in Mumbai. JSW Steel shares closed at 730 rupees, down 9 percent.

Steelmakers export 5 million tons, about one-tenth of total output. India is the world's fifth-largest maker of the alloy.

Rising prices have eroded the popularity of India's ruling Congress party, which lost ground in nine of 11 state elections since January 2007. Prime Minister Manmohan Singh's main ally, the communist parties, and the opposition Bharatiya Janata Party staged nationwide protests last month, blocking trains and roads.

``I don't think the government will lift the export ban in October,'' Gujarat Ambuja's Gupta said. ``It will be keen to make sure that prices remain under control.''

India's inflation rate climbed to 11.42 percent in the week ended June 14, the highest since 1995.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net

Last Updated: July 3, 2008 09:14 EDT