* Rival supplies shrink from Brazil, Argentina
* India to export record 3.5 mln T corn this year
* Export demand buoyant, prices surge
By Mayank Bhardwaj
NEW DELHI, Aug 10 (Reuters) - A consumer industry has called for curbs to corn exports from India and traders are worried that New Delhi could concede to the demand as the government keeps an eye on rising prices fanned by drought.
Overseas sales of corn from India, Asia's leading exporter, have been brisk as supplies from Brazil and Argentina have dried up. Output in the United States, another leading producer, is set to fall due to the historic drought there.
As a result, benchmark Chicago prices rose to an all-time high on Friday, highlighting fears of a global shortage after the worst drought in half a century wilted crops in the Midwest grain belt of the United States.
"The government needs to look at ways to curb exports and the best way to do it is to fix an export quota," said Amol Sheth, president of the All India Starch Manufacturers' Association.
Poultry, dairy and starch industries are the main buyers of corn.
Anxious traders believe the government could intervene, as it did on rice and wheat in 2007 after production fell.
"Export demand is robust, our export and domestic prices have surged, our production will fall due to a drought here, supplies from Brazil and Argentina have declined and production is going to be bad in the U.S.," said the head of a New Delhi-based trading firm, who did not wish to be named.
"These are the reasons that can prompt the government to take some action to restrict corn exports. There could be some sort of an export tax, if not a ban," he said.
The government is keeping a tab on corn and a drought panel headed by Farm Minister Sharad Pawar would review the overall food situation after Pawar comes back from his trip to drought-hit states, a government official said on Thursday.
India is Asia's biggest corn producer behind China. It mainly sells to Malaysia, Indonesia and Vietnam, which seek small cargoes for prompt delivery.
Indian corn is being exported to southeast Asia at about $315-$320 a tonne, up from $270 per tonne six months ago, while supplies from South America are available at $350 a tonne, another trader said.
"Prices indicate toward hefty exports. About 15-20 vessels are waiting to be loaded at Chennai, Tuticorin and Kakinada ports. Big traders have started stockpiling and there's hardly any stock with farmers," the first trader said.
Local retail prices have surged 40 percent in the past 30-40 days, he said.
Reeling under the first drought in three years, farmers have only been able to plant summer-sown corn on 6.57 million hectares, down from 6.88 million hectares a year earlier.
Some believe India has adequate stocks.
"Rains have improved and supplies from the new season will arrive from October. I believe there is no shortage of corn," said Amit Sachdev, India representative of the Washington-based U.S. Grains Council.
Monsoon rains were just 1 percent below average in the week to Aug. 8, a slight improvement from a 4 percent shortfall in the previous week. Rains are 17 percent short of normal so far this season.
Last month, Sachdev forecast India's corn exports at a record 3.5 million tonnes in the current year to September against 3.2 million tonnes in the previous year. More than 3 million tonnes have already been shipped out.
Output was at 21.6 million tonnes in the crop year to June 2012, slightly lower than the record 21.7 million tonnes in 2010/11. Consumption is pegged at 17-18 million tonnes annually. (Additional reporting by Deepak Sharma in MUMBAI; Editing by Stephen Powell)