Commodity prices; Freight rates ease; World maize consumption up 5%

Commodity prices

The Indian corn prices are little down from last week. Average prices on Dec 30, 2004 were reported at Rs.5055 per MT ($113.6) at the market yards. Last year at the end of the year the average price was at Rs.4800 per MT ($106) at the market yard, a 5.3 percent increase over last year.

Prices in US are a little higher than reported for last week. Corn for Jan and March 2005 delivery is reported at $99 & $98.5 per MT (FOB US Gulf). Sorghum prices were reported at $100 - $101 per MT (FOB US Gulf) for Jan & March delivery. Barley prices are reported at $110 per MT (FOB PNW) for Jan to March deliveries.

Corn co-products prices are lower than expected. Corn Gluten Feed is reported to trade at $ 88 per MT for deliveries in Jan – March 2005 (FOB US Gulf), while Corn Gluten Meal (60 percent protein) was reported at $ 297 per MT (FOB US Gulf). The Soy meal prices (48 percent protein) were reported to be much lower than expected at $187 per MT (FOB US Gulf). Prices in India are reported at $195 per MT (at the origin – Central India – Madhya Pradesh). Last sales were reported at $240 - 245 CNF South East Asia. The higher local prices are a setback for Indian exports, but this has helped in increasing utilization of Soy meal in the domestic poultry industry.

Freight rates ease

Reports from Japan and US suggest easing of freight rates. Spot ocean freight rates are down from their November highs as China and other countries, which were buying raw materials, have suddenly stopped purchases. The rate for mid-size ships for transportation of coal and grain shipped from the US Gulf to Japan has declined slightly more than 15 percent.

On the world-scale schedule index -- a gauge for determining spot prices for crude oil tankers -- the rate for shipping from the Middle East to Japan has plunged to 135 -- down 57 pct from the a 31-year high of 315 recorded just a month ago. The rate for the Mideast-US route has dropped to 130 from 240 early last month.

The fall could be due to many factors, the report suggests. US oil refiners have cut their purchases as inventories increase. Also China and Europe is seen to have completed their purchases on iron ore and coal, which has helped ease the ocean freight market.

Availability of more containers in the market is seen as the reason for a reduction in container rates as well, which will further help in the reduction of freight rates.

World maize consumption up 5%, prices remain low on abundant US supplies
(From Grainnet.com)

World maize consumption in 2004/05 is now estimated at 678 million metric tons (MMT), nearly 5% more than last year and well above the previous forecast of 666 MMT. Unexpectedly abundant supplies from the US are keeping prices low compared with other feedstuffs, helping to boost local consumption. However, apart from the US, where maize use for ethanol continues to leap ahead, demand is fairly sluggish. In Asia, a combination of recurrent disease problems affecting poultry and pigs and the effects of opening domestic markets to imports of meat products has stalled growth in livestock numbers. As a result world consumption will rise only modestly over the forecast period to 686 MMT in 2005/06 and 696 MMT in 2006/07.

World trade maize in 2004/05 is currently forecast at 77 MMT, about 3 MMT less than last year and the lowest since 1999/2000. It is forecast to increase only slightly to 80 MMT in 2005/06 and 83 MMT in 2006/07. Livestock farming in South and East Asia seems to be reaching certain maturity, as most people who are likely to eat grain-fed meat probably now do so. Some of the major importers (South Korea, Taiwan) have been rocked by disease problems affecting pigs and poultry. Furthermore, WTO-imposed reductions in tariffs on meat imports have forced domestic livestock industries to be more efficient in feed usage.

After falling sharply in the first months of 2004 in the wake of an outbreak of avian influenza, China's compound feed production resumed its growth, helped by a switch by consumers to pork. Consumption of beef and dairy products is also rising rapidly. Because of the poor state of China's grasslands cattle need supplementary feeds. Maize consumption in 2004/05 is estimated at 128 MMT, 3 MMT more than this year's comparatively good crop. China will continue to be a net exporter in 2004/05, but only just, exporting only around 4 MMT, and at the cost of a further sharp depletion of stocks. Water is an increasing concern. Maize production will struggle to keep up with use over the next few years, and it is expected that China will become a net importer of maize by 2006/07, and possibly sooner.

Taiwan's Feed Industry Association predicts that the country's demand for maize (met almost entirely from imports) will drop by over 20% in 2005 because of lower meat production. Import quotas on chicken meat, which have secured a market share of less than 10% of consumption for local producers, are to be eliminated at the beginning of 2005 under World Trade Organization (WTO) arrangements. Poultry imports are predicted grow by 50% in 2005 and to continue rising rapidly until the domestic industry restructures and lowers its costs. Meanwhile, disease outbreaks are curtailing pork production. Demand for feed grain is expected to decline as domestic farmers struggle to compete with imports. As a result, maize imports are forecast to fall from 4.5 MMT in 2004/05, to around 4 MMT in the next two years.

In the EU, a much-improved maize harvest is expected for 2004/05, after last year's drought. The maize crop is estimated at 52 MMT, up 30% on the 2003/04 figures. Consumption is also expected to increase in 2004/05, but will be limited by the EU's ample supplies of domestic wheat and barley. Apart from the limited amounts to be bought from the US under long-standing WTO reduced-levy agreements, the feed deficits of the original members (in particular Spain) will be met by the newer member states--notably Hungary, where the 2004/05 harvest is likely to be 80% higher than last year. As a result of higher domestic production, total EU imports in 2004/05 are forecast to fall from 5.5 MMT in2003/04 to 2.4 MMT in 2004/05, and remain at a similar level in 2005/06 and 2006/07.

While all other countries including US, EU, South America, Middle East and South East Asia are expected to benefit from low maize prices, Indian end users are in for tough times. The corn prices are higher than last year and with imports not possible due to the import duty and the TRQ, the exporters of value added products particularly chicken, starch, value added starchs, malto-dextrins, corn gluten meal are expected to lose their markets in Middle East and South East Asian countries as their cost of production will be higher. The corn production in In India during the Khariff (harvest in Oct 2004) was 9.8 MMT while in Rabi (harvest in Feb – March 2005) is expected at 1.6 - 1.7 MMT, the deficit is expected to be close to 1.5 - 1.6 MMT. (based on the total consumption of 13.3 MMT) which will effect prices further in April – Sept 2005, when maize is not available.

Amit Sachdev
Consultant
U S Grains Council
E Mail: bluecross@touchtelindia.net

Indian maize prices and world coarse grain production; Brazil to become No. 1 chicken exporter in the world; Does Asia have a choice ?

­Indian maize prices and world coarse grain production

 

Some sections of the press reported a record Indian maize production of 16 MMT in 2004-05, much higher than last years (2003-04) 12.9 MMT. The report also suggested possibilities of 3 MMT of corn exports to the South East Asian countries and a tough fight to US and Chinese origin maize due to freight advantage.

 

To put things in the right perspective, total food grain production in Khariff season is reported to be down from 112 MMT in 2003-04 to 100 MMT in 2004-05, a reduction of almost 10.7 percent. Indian maize production for Khariff season is expected at 9.0 - 9.5 MMT, down from last yearÂ’s 11.1 MMT. India expects to produce a little higher Rabi corn crop (1.8 MMT) to be harvested in Feb 2005.

 

Local prices at the market yards are ruling higher than last year. During the week before Christmas last year (Dec 2003) maize prices were as under:

 

Andhra Pradesh Rs.4770 per MT ($ 107);
Gujarat Rs.5270 per MT ($118);
Maharashtra Rs. 4970 per MT ($ 111); and
Tamil Nadu Rs. 4780 per MT ($107).

 

This year the prices in Karnataka and Andhra Pradesh are averaging close to Rs.4900 per MT ($110). Adding packing, freight loading, unloading expenses, the FOB values will be close to $137 per MT. Prices in Gujarat are higher by almost Rs.1070 per MT ($24), while in Maharashtra the average prices are similar to the prices in Karnataka and Andhra Pradesh. In Tamil Nadu however, the prices are higher and are being quoted at Rs.5200 per MT ($117). Overall the prices are higher in all markets as compared to last year.

 

The projected U.S. price range for maize was is at U.S.$1.70 to U.S.$2.10 per bushel (U.S.$67 to U.S.$82.67 per ton).

 

US Gulf FOB prices are close to $95 per MT, US corn will be competitive in the South East Asian Region. China on the other had is expected to have a surplus of about 4 MMT of corn and with Thailand also in the market to sell corn (due to drop in Poultry production), it is unlikely that Indian corn will find favor in the South East Asian Market at such high FOB values.

 

Though reports suggest of some sales to Sri Lanka at $131–$134 FOB for contracts already signed, there is no hope that such prices will come again.

 

While IndiaÂ’s coarse grain production is down, USDA expects the world coarse grain production to be a record high at 989 MMT in 2004-05, almost 9 percent higher than 2003-04. Larger crops are projected for Ukraine (up 1.4 million tons), Canada and Mexico (each up 0.9 million tons), and China (up 0.5 million tons), with smaller increases projected for several other countries.  Crop reductions are projected for Russia (down 0.7 million tons) and Australia (down 0.3 million tons).  Global consumption is raised 2 million tons Global coarse grain stocks rise 3 million tons from last month and are up 23 million tons from last year.  Stocks rise in the United States, South Africa (up 0.7 million tons), and Canada (up 0.6 million tons), with smaller increases forecast for many other countries.  Stocks decline in Russia, the EU-25, Mexico, and several other countries.

 

Brazil to become No. 1 chicken exporter in the world (inputs from e-feed link)

 

Brazilian poultry farmers, sustained by opportunities in the Middle East and Asia, have increased their production and are expected to overtake the United States by end the fiscal year as the world's No. 1 chicken exporter.

 

In 1997, Brazil's chicken exports were less than a third those of the US. But production has taken off since the year 2000. Growth averaged 20 percent in the past 2 years, and Brazil presently exports to 127 different countries and controls 36 percent of the world share, according to the Brazilian Association of Chicken Exporters.  The main markets are in the Middle East and Asia, particularly China.

 

When Asian producers were laid low by avian influenza earlier this year, their Brazilians competitors moved in, and exports to Asia went up 84 percent between January and October.

 

There are other, more established reasons for the rise. Brazil's industry is relatively new and therefore modern. Production costs are up to 25 percent lower than in the US. And sanitary controls have helped keep the country's birds free of pests.

 

On the other side of the globe, the poultry integrators in India are at a loss. In Jan 2004 the cost of production of Chicken (live) was just about Rs.2.03 per kg ($ 0.05) higher than US. In September 2004, the cost of production in India for integrators jumped to $ 0.70 per kg, a difference of almost $0.14 per kg from the US. Current costs remain at September 2004 levels even though Soymeal prices are very much lower, but corresponding maize  prices are higher. The Brazilian cost of production during the whole year has been stagnant at about $0.41 – 0.43 per kg, which gives the Brazilian farmers an edge.

 

Does Asia have a choice ? (inputs from yahoo news)

 

The chicken-slaughtering days at wet — or live animal — markets may be numbered. As part of an effort to contain avian influenza, the deadly bird flu virus, the Hong Kong government is offering to buy out hundreds of chicken stalls and it wants to set up a centralized slaughterhouse. 

 

The desperate fight to prevent bird flu from turning into a pandemic that could kill millions is threatening old cultural practices across Asia — from buying live birds at Hong Kong's markets to betting on rooster fights in Thailand to letting chickens and ducks run free in backyard farms across the region, including India.

 

Public health officials say Asia has no choice. The deadly H5N1 bird flu virus is infecting birds on farms and in the wild in at least eight countries: Cambodia; China, Indonesia, Japan, Laos, South Korea, Thailand and Vietnam. Can India be far behind?

 

So far, the bird flu has had trouble making the leap from animals to humans. When it does, it's lethal. The virus killed 32 of the 44 people with confirmed cases this year. Scientists worry that the virus will mutate into something that can infect humans more easily and be transmitted from human to human, potentially devastating populations with no immunity.

 

Is this the consequence of rising prosperity, some one may ask. People used to be satisfied with a bowl of rice and some vegetables. Now they want some meat with their dinners, specially chicken. Anyone who wants to make a little more money starts raising chickens in the backyard and there is no consideration for hygiene in sanitary controls in the backyard farms and the wet markets in most of the asian cities of Hong kong, Delhi and countries like Laos,, Combodia and Vietnam.

 

The alarm has sounded in many Asian countries. In Hong Kong, after the 1997 outbereak the wet markets were ordered to replace easily contaminated wooden cages with metal or plastic ones. In addition the Wet markets were required to close twice a month for cleaning, farms were ordered to vaccinate chickens, customers were forbidden from touching live poultry. (In the old days, some customers liked to pick up the birds, blow on their tail feathers and inspect their hind quarters to see if they were plump enough to make a good meal.). It is believed these measures were not enough.

 

Either the Asian poultry industry, including India has to mend its ways and change and become modern to provide safe meat to its populaions or perish.

 

It is better to change with times than perish !!
­­

 

Amit Sachdev­
­Consultant­
­U S Grains Council­
­E Mail: bluecross@touchtelindia.net

US corn prices and prices in India, Ethanol business booming in US, The great Indian diet revolution

US corn prices and prices in India

 

The US corn prices are reported to be steady this week, though exports ales are down. The commodity prices were as under:

 

Corn: $94.50 per MT FOB US Gulf (Feb March delivery)

Sorghum: $98.00 per MT FOB US Gulf (Feb March delivery)

Barley: $115.00 per MT FOB PNW (Feb March delivery)

 

Indian prices of corn are still higher than last year (Dec 19, 2003).

 

Corn prices reported last year for local and yellow varieties averaged at Rs.4910 ($109) & Rs.5040 ($112) per ton respectively on Dec 19, 2003. This year (Dec 17, 2004) the prices for the same varieties  are higher and reported at Rs.5230 ($116) and Rs.5480 ($122) per MT at market yard. The prices are higher by approximately 6.5 percent for local and 8.7 percent for yellow varieties, thus increasing the cost of production of chicken & eggs for the Indian poultry farmer and reducing competitiveness.

 

Ethanol business booming in US 

Strong prices and a bumper crop fuel the surge in production  (inputs from Grainnet.com)

 

The ethanol business in US exploding, thanks to strong prices for the corn-based gasoline additive and a bumper crop of corn. It is expected that 12% of the corn crop will be used for ethanol production this year. The ethanol boom is benefiting investors and farmers alike.

 

Production of the corn-based fuel could hit 5 billion gallons (18.9 billion liters) a year as early as 2006, up from 2.8 billion gallons (10.5 billion liters) last year. Iowa alone will shortly hit 1 billion gallons (3.8 billion liters) in annual production capacity. To produce 5 billion gallons (18.9 million liters), 2 billion bushels (50 million metric tons) of corn will be needed.

 

In Iowa alone, the industry provides 3,700 jobs, consumes about $910 million worth of corn a year and racks up $2.6 billion in sales of alcohol and a byproduct used for cattle feed, according to an analysis by Iowa State University. In Nebraska, nearly 200 million bushels (5 million metric tons) of corn will be used to produce the alternative fuel at the state's 11 ethanol plants this year. Ethanol plants increase corn prices in their areas by 2.0 – 5.0 percent. Ethanol is selling for about $1.50 a gallon, ($ 0.39 per liter) well above its cost of production of less than $1 ($ 0.26 per liter)

 

According to Renewable Fuels Association, there are 82 plants now in operation nationwide, which will produce 3.4 billion gallons (12.87 billion liters) of ethanol this year. Sixteen plants now under construction will push the industry's production capacity to 4.3 billion gallons (16.27 billion liters).

 

What is driving this boom is a decision by California, New York and Connecticut to ban a rival gasoline additive called MTBE. Both additives boost the oxygen content of gasoline, a requirement of federal air-quality standards. However, MTBE is being phased out because of concerns it is leaking from underground tanks and fouling drinking water.

 

There is another important factor in the ethanol boom: soaring prices for oil and gasoline. The price of oil topped $50 a barrel this fall and remains above $40. That has made gasoline so expensive that oil companies can save money by adding ethanol to the fuel.

 

An energy bill that stalled in Congress this year would have required the nation to use 5 billion gallons 18.9 billion liters) of ethanol a year by 2012. But that figure may be too low, given that the industry already is closing in on that level, farmers say.

 

It is expected that the US congress will enact energy legislation, which includes a national renewable fuels standard that would increase the use of alternative fuels in US including ethanol and bio-diesel.

 

As per President Bush, "We'll pursue more energy close to home in our own country and in our own hemisphere so that we're less dependent on energy from unstable parts of the world,"

 

The great Indian diet revolution

 

According to the report by Mr.Ashok Gulati, Director, Markets, Trade and Institutions Division at International Food Policy Research Institute, (IFPRI) US, the Indian diet has changed considerably in the last 2 decades. For the period 1983 to 2000 studied, the diets of all income groups has changed from cereals to non-cereal base. Energy intake for poor has increased while that for rich has decreased. The consumption of high value foods has shown an increase in low income group . The most interesting revelation is the change in  the growth of meat consumption (meat eggs and fish) which increased by 100% in low income group to over 121% in high income group from 1983 to 2000.

 

These changes in consumption pattern can be attributed to more income in the family as part of the increasing women work force, as per the report.  

 

Amit Sachdev
Consultant
U S Grains Council
E Mail: bluecross@touchtelindia.net

More Corn means lower prices....; UK study finds benefits in GM crops; Bird flu deadlier than SARS

More corn means lower prices of US Corn.......

 

But it also means low export sales figures. As per the USDA estimates, due to lower commodity prices and large supplies around the world, the sales of US corn are forecast at $56 billion in FY 05 as against $62.3 billion in FY 2004 (fiscal 2004 ended on September 30, 2004). Harvest is almost complete in US. Though the domestic use will is higher due to lower prices, it will take more effort to consume all the corn in US. A higher global demand can certainly help the markets.

 

As per the USDA report, the growth in developing countries is projected to exceed 6 percent in 2004 and 5.5 percent in 2005. Asia being the key growth center will continue to be the fastest growing region with a 7 percent growth in 2004 and 6 percent in 2005. India's GDP growth will be in excess of 7 percent in 2004 and near 7 percent in 2005 as well.

 

On export front the report has identified several constraints, like

 

a. A weak dollar though makes commodities affordable; a strong dollar in key markets lowers the purchasing power.

b. High freight rates dampen the demand of the commodities in foreign markets.

 

Of the total corn produced in US, almost 80 percent in used domestically. The report forecasts the food and industrial usage of corn will be about 25% while exports will be about 19%. US farmers this year have produced 16% more corn, enough to fill rail cars that can circle the world at the equator. 

 

US corn prices were reported at $94.5 per ton FOB (US Gulf) for January and February deliveries.

 

Prices in India are stable, though a marginally high for this time of the year. On the week ending Dec 03, 2004, Corn prices were reported in 38 market yards. The prices for various varieties were reported as

 

Hybrid/Local: $105 per MT (high $118; low $92)

Local: $120 per MT (high $143; low $97)

Yellow: $132.5 per MT (high $137; low $128).

Dollar is weak against Indian Rupee and was traded at Rs.44.50.

 

Last year in the first week of Dec 2003, corn sales were reported in 83 market yards. Average prices of week were as under:

 

Hybrid/Local: $100 per MT (high $105; low $97)

Local: $108 per MT (high $111; low $105)

Yellow: $99 per MT (high $104; low $95).

Dollar was strong and was being traded at Rs.45.50 

 

UK study finds benefits in GM crops

A study of genetically modified crops in the UK conducted by the Botanical and Rotational Implications of Genetically Modified Herbicide Tolerance (BRIGHT) Link project has found no evidence that they harm the environment.

 

The Bright project looked at varieties of sugar beet and winter oil-seed rape, which had been engineered to make them tolerant of specific herbicides. The novel crops as they are called in Canada and UK were compared with non-GM cereals grown in rotation. In another related study (Farm Scale Evaluations) conducted early this year, found GM maize, to be better than its conventional counterpart.

 

The project concluded that the GM varieties, used in rotation, did not deplete the soil of weed seeds needed by many birds and other wildlife. The project also concluded that the GM crops would be beneficial for farmers in many ways. The report has concluded that there are ways in which these crops can be managed, which would be practical. The use of these crops can lead to flexible use of herbicides, which will be cost effective.

 

The European Union has indicated that member countries will have to base decisions for GM agriculture on science rather than public opinion in future.

 

In India, the Department of Biotechnology (DBT) has formed six major working groups that would deliberate on issues concerning the biotech policy. The working groups will deliberate on policy measures required to promote innovation and intellectual output, strategies to promote conversion of scientific knowledge to products, human resource, infrastructure, re-engineering of institutions, biotech parks, bio-business and investment, regulation and legislation & public awareness. It is anticipated that the biotech policy will be announced by January 2005. Dr.M K Bhan, Secretary DBT has stated,  “We are studying methods to harmonize our rules and regulations with those of US so that Indian approvals are recognized internationally”.

 

Bird flu deadlier than SARS

 

A World Health Organization (WHO) communiqué has stated that the H5N1 strain of Avian Influenza is more lethal than Severe Acute Respiratory Syndrome (SARS).

 

While AI virus has killed 32 people in Thailand and Vietnam in 2004, SARS killed 800 people around the world in 2003. While SARS has a mortality rate of 15 percent, the H5H1 has a mortality rate of 33 percent. It has a potential to kill 50 million people worldwide. H5N1 is versatile and has "become more pathogenic," the communiqué states.

 

In a related development, Hong Kong authorities are considering a ban on slaughtering of poultry by retailers in a bid to prevent a bird (avian) flu pandemic. This development was reported after WHO issued the warning that the next pandemic could be caused by H5N1 virus.

 

Shopkeepers have always tried to resist laws that prohibit them from slaughtering poultry in front of their customers. It is common for consumers all over Asia including Hong Kong, China and India to have their poultry slaughtered in front of them as they like their food fresh. All cases of humans getting infected with the bird flu virus have been when there was close contact with live, infected animals.

 

A directive from Municipal Corporation of Delhi, providing guidelines for sale of safe meat to the citizens and prohibiting slaughter of animals and birds inside the meat shops under its jurisdiction is a step in right direction. It is a way to prevent not only a pandemic that could come, but also help the environment and provide safe meat to the consumers.

 

Amit Sachdev
Consultant, U S Grains Council
E Mail: bluecross@touchtelindia.net

Corn prices in India, Municipal Corporation of Delhi effectively bans slaughter of birds within MCD jurisdiction, High Freight Costs for corn deliver

Corn prices in India

Corn prices in India are stable for a week. Comparisons for week ending prices for some markets are as under:

Nov 19, 2004
(All prices on per ton basis in market yards)

Andhra Pradesh
Nizamabad Min $110 - Max $114
Badepalli Min $109 - Max $115 (Market received over 5500 tons of corn)
Nandikottur Min $110 - Max 115
While the lowest price was quoted in Siddipet ($92) the highest was quoted in Badepalli ($115)
Gujarat
Dahod Min $119 - Max $ 133
Rajkot Min $ 129 - Max $ 133
Uttar Pradesh Min $ 121 - Max $134
Karnataka
Davangeve Min $ 99 - Max $ 106
Dharwad Min $ 97 - Max $ 99
Rannebannur Min $ 102 - Max $ 111 (Market received over 9100 ton of corn)
While the lowest price for local variety was quoted at Bagalkot ($71) the highest price was in Kolar ($121)

Nov 25, 2004

Andhra Pradesh
Badepalli Min $ 106 - Max $ 116 (Market received over 2700 tons of corn)
Karimnagar Min $ 109 - Max $ 115
Karnataka
Davangere Min $ 102 - Max $ 107
While the lowest price for yellow variety was quoted at Atahani ($92) the highest price was in Mahuva (Gujarat) ($141)

(Source: Agmarketnet)

Municipal Corporation of Delhi effectively bans slaughter of birds within MCD jurisdiction

Office order No 860/DVS/2004 dated Nov 22, 2004 issues by Municipal Corporation of Delhi, Veterinary Services Department, on the recommendations of Dr.Nagendra Sharma Expert Committee lays down the norms for

1. Shop location for meat sale,
2. Size,
3. Premises,
4. Ventilation in shops,
5. Equipments,
6. Transportation of meat,
7. Pest control,
8. Employee Hygiene,
9. Sanitary Practices in shops and
10.Packaging and dispensing of meat.

As per the order, licenses will be granted to shops who will comply with all the technical instructions laid down on the above points.

The norms laid down advocate that "No live animal or birds should be allowed inside or adjacent to the meat shops" and "Slaughtering of animals/birds inside the shop should be strictly prohibited".

What consumers need ?

There has been a lot of debate on what the consumer's demands are and what the consumer's need, with regard to meat. In most cases the companies try to sell what they can produce. While the consumers do look for quality and convenience they also want choice and more recently tend to look for meal solutions and ideas and not just meat. While this is true in most cases foremost on the minds of the consumer is value for money. Geographical differences can make a difference in consumer demands and how companies can market their products.

In this equation of sale of a product by the company and purchase of the product by the consumer. one factor that is most important is the 'confidence'. The consumers need an assurance that the product that is on the shelf will add to their well being and will be safe for the family. The consumers concerns are not about the safety of the product when it reaches their homes (where most food safety hazards occur), but when the product was being processed or at the farm.

The Indian poultry meat industry needs to move forward in the direction of building the confidence level of the consumer and make improvements in the food safety practices. All this needs to be backed up with a commitment towards the well being of the consumers.

The move by Municipal Corporation of Delhi is the commitment by the agency towards the citizens to Delhi. Now it is the turn of the industry to take the lead and move ahead. (Should you need a copy of the order, please feel free to contact me.)

High Freight Costs for corn deliveries to Asia

Though the US corn prices are dropping, the effect may not be seen in Asia as the freight costs are rising. The freight rates stabilized for a week and are high again due to strong demand and limited availability of ships.

Rates for Panamax-size cargoes were quoted at $64 a ton on the benchmark route from the U.S. Gulf to Japan, up from $63/ton last week. U.S. corn prices rose by over $3 per ton from 159.8 per ton to 162.8 per ton on cost and freight basis for January-to-March shipment. In South Korea, the prices were $155/ton CNF from PNW.

Amit Sachdev
Consultant, U S Grains Council, India
E Mail: bluecross@touchtelindia.net

WASDE Report released, Inflation is up again in India and Indian corn prices slide lower, Climate change can affect grain production

WASDE report released

 

WASDE report was released last week (Nov 12, 2004). The US corn production is now estimated at 298.29 million metric tons, up by over 3.25 million metric tons. The average yield per acre is up from 4.02 tons to 4.06 tons. In 2002/03 the yield was 3.28 tons/acre and increased to 3.61 tons/acre in 2003/04.

 

The use of corn for ethanol production is estimated to be 34.80 million metric tons in 2004/05, up from 30.58 million metric tons in 2003/04. The use in 2002/03 was 25.30 million metric tons. 

 

The report can be assessed at

 

http://www.usda.gov/oce/waob/wasde/latest.pdf

 

Inflation is up again, Indian corn prices slide lower

 

Following the price hike in petrol and diesel prices, the inflation for the week ending Nov 06, 2004 was reported to be 7.76 percent. Though the agri produce prices were reported to be lower than the preceding week, the increase in inflation is due to the hike in petrol prices.

 

As more stocks reach the market, the India corn prices slide lower. The prices on Nov 19, 2004 at respective  Mandi's (market yards) were reported as under:

 

Local Variety

Bagalkot (Karnataka): $71 per MT (Min.)

Kota (Rajasthan): $123 per MT (Max.)

Yellow (Cattle Feed)

Jamkandi (Karnataka): $88 per MT (Min.)

Rajkot (Gujarat): $133 per MT (Max)

Hybrid Local

Siraguppa (Karnataka): $88 per MT (Min)

Gowribidanor (Karnataka): $112 per MT (Max)

 

Climate change can affect grain production

 

Global warming is melting the Arctic ice faster than expected, and the world's oceans could rise by about 3 feet by 2100, swamping homes from Bangladesh to Florida, Robert Corell, chairman of the eight-nation Arctic Climate Impact Assessment (ACIA), said on November 9, 2004. 

 

The average temperature of major Asian cities could rise by 3 to 10 degrees Celsius by the end of the century, while longer droughts and flooding threaten rural areas, according to director of the UK Met Office's Hadley Center for Climate Prediction and Research.

China's first report on greenhouse gas emissions, warns that climate change will have an impact on its grain production. Reports suggest that the crop yields will decrease, but not all over, some parts may also benefit. 

 

"It can be seen from observations during the past 40 years that the runoff of China's main rivers has decreased. There has been a continuous drought in the North China Plain since the 1980s, while flood-related disasters have occurred frequently in southern China", the report says. "This impact has been enhanced significantly since the 1990s."

 

"Simulations indicate potential food production will decrease by 10 per cent due to climate change and extreme climate events between 2030 and 2050 under the present cropping system, crop varieties, and present management levels," the report said. "There will be an overall decreasing trend in wheat, rice and maize yields." Carbon dioxide levels, for example, had increased at a rate of about 4 per cent a year in the past 10 years.

UN statistics show that six of the world's 15 most polluted cities are in Asia, and the region generates a third of the world's carbon dioxide emissions. In Asia's developing regions, around 785 million people lack regular access to safe water. 

 

Underlining the threat, director of the UK met agency says,  "if sea levels exceeded the top end of predictions for the year 2100 by rising a meter, flood-prone Bangladesh would lose 17 percent of its land, according to preliminary indications.

 

What will happen in India??

 

A report from Dr.John Reilly of Natural Resources and Environment Division, Economic Research Service, USDA, Washington DC, USA suggests that in South East Asia including Bangladesh, India, Philippines, Thailand, Indonesia, Malaysia, Myanmar, Maize yields could be effected by -65 to-10 percent, while Rice and Wheat yields could be effected by -22 to +28 percent and -61 to +67 percent.

 

In China the effect will be most profound on Rice, with yields effected between -78 to +28 percent. This includes rainfed and irrigated rice. Positive effects can be seen in NE and NW China, negative in most of the country, the report suggests.

 

Food for thought

 

As per the World Bank figures, India's population is growing at 1.6 percent per year and will reach 1.20 billion in 2012. Though as on date, India does not have a food grain shortage situation, but there have been situations when the total food grain production was much below the 200 million metric tons mark (174 million metric tons in 2002). The target for 2003 was 220 million metric tons and the production was only 212.05 million metric tons (GOI reports).

 

The per capita food grain availability was highest in 1999 at 213.8 kg per person. In 2002 it dropped to 169.2 kg per person. India would need to produce 257.88 million metric tons of food grains in 2012 to feed its growing population, considering a constant availability of 213.8 kg per person per year.

 

Think about this, what needs to be done. If you have any comments, please feel free to contact me.

 

Regards

Amit Sachdev
Consultant, U S Grains Council
E Mail: bluecross@touchtelindia.net

Corn prices in India, Bt cotton in India - a success story, China's Corn Crop - Just sufficient enough to feed itself

Corn prices in India

 

As the diwali festival approaches the markets are getting stabilized and little slow. Arrivals are slow in almost all the markets. On Nov 10, 2004 the prices of local corn were reported as under

 

Nandigama (AP) $110 per MT

Bangalpre (Kar) $ 115 per MT

Hassan (Kar) $ 101 per MT

 

The same markets were little higher on Nov 09, 2004

 

Nandigama (AP) $114 per MT

Hassan (Kar) $ 103 per MT

 

The minimum and maximum prices for yellow corn on Nov 09, 2004 were as under:

 

Siddipet (AP) $91 per MT

Mahuva (Guj.) $ 134 per MT

 

For the yellow variety the prices were as under:

 

Dahod (Guj.) $ 117 per MT

Jamkandi (Kar) $ 125 per MT

 

Bt cotton in India - a success story

 

While going through some news reports, read an interesting article on how Bt cotton has given a boost to Indian cotton production.

 

As per Mr.Sharad Pawar, Bt cotton from Monsanto has been a significant contributor to India record cotton production this season.  In some areas the cotton production is higher by 30 - 35% benefiting farmers to a great extent. Also the quality is much better than last years.

 

He also mentioned that the Bt cotton success can be replicated in other GM crops which are being developed in India. "The results certainly encourage us to look at other GM crops," he said.

As against the average 16-17 million bales production, India is this year expecting record production of about 20 million bales, said Mangala Rai, director general of Indian Council of Agricultural Research (ICAR).

 

It is good to know that the highest authority in Agriculture is positive about the and this will certainly help promoting the technology which is beneficial for the farmers and the environment.

  

China's Corn Crop - Just sufficient enough to feed itself

 

China is expected to produce 122 MMT of corn in 2004, up 5.3% over last year, a report from Chinese Ministry of Agriculture and China National Grain and Oils Information Center states.

 

Compared with other grains, a deficit between domestic corn production and demand is estimated at 7.5 million tons in the 2004-05 marketing year, the report said.

 

The corn price is expected to be stable and even trend lower due to an expected bumper crop worldwide, Xinhua added.

 

Compared with anticipated shortfalls in rice, wheat and soybean production, the shortfall in corn is expected to be the smallest, said the report, without providing estimates for shortfalls in the other crops.

 

China's grain production has been declining over the past five years, largely due to low prices and reduced acreage. But demand for grains has been steadily growing as a result of rising incomes and rapid economic development.

 

The government has drawn down its grain reserves continuously to fill the shortfalls in supply, which had prompted a run-up in grain prices late last year. The government doesn't release data on grain reserves to the public.

 

Government incentives to encourage grain production earlier this year seem to have worked, with several reports of projected higher output.

 

In addition, China slowed its grain exports this year. In the first nine months, it exported only 1.9 million tons of corn, down 82.4% over the same period last year. Rice exports fell 58.5% in the same period to 777,112 tons, while wheat shipments fell 50.9% to 658,731 tons.

 

Also, China imported near 5 million tons of wheat in the first nine months, up sharply over last year.

 

Amit Sachdev
Consultant
U S Grains Council
E Mail: bluecross@touchtelindia.net

US Corn harvest & prices, Prices in India, Ethanol use in India, Avian Influenza again

US Corn harvest & prices

 

As more and more crop is harvested and the weather remains good for harvesting, the prices continue to slide downward. As on Oct 31, 2004 around 65% of the corn crop was harvested. The week ending prices for the commodities are as under:

 

Corn: $94.50 per MT FOB US Gulf (Dec 2004 delivery)

Sorghum: $97.50 per MT FOB US Gulf (Dec 2004 delivery)

Barley: $105 per MT FOB PNW (Dec 2004 delivery)

 

The international freight rates are still ruling very high, which might have affect on the movement of the crop in the international markets.

 

Internally, as more crops come off, stocks are being piled up at many locations. Barge rates are still very high and movement by rail slow. It is hoped that the domestic demand will be strong especially in livestock and ethanol in US.

 

Corn prices in India

 

As the arrivals start n Indian markets the prices are still higher than last year. The minimum support price is set at Rs.5250 per MT ($115 per MT) this year. On Nov 05, 2004 the minimum price for local variety corn was offered at Mahbubnagar (AP) at $100 per MT, while the highest price was at Bangalore at $117 per MT. The yellow variety was traded at $128 per MT at Rajkot (Gujarat); while at Dahod (Gujarat) the same was traded at $132 per MT. (Note: All the above prices are at market yards at respective markets).    

 

Ethanol use in India

 

As international oil prices touched $50 a barrel again, the Indian oil companies could not sustain it any longer and increased the oil prices, putting pressure on the economy and fueling inflation. The increased prices are bound to increase the rate of inflation by few points. As on Oct 23, 2004 the rate of inflation was 7.38%, up from 7.1% from the preceding week.

 

Government of India had envisaged a countrywide coverage of 5% ethanol blended petrol by 2004, but due to the low sugarcane production due to drought, the coverage may not be possible.

 

As per a report, the price of ethanol is set at $0.50 - $0.53 per litre, while that of petrol in India is $0.86 per litre (in Delhi) and higher in other states. A 5% - 10% blend will certainly help the industry to cope with the increased oil prices.

 

The base for ethanol, molasses from the sugar industry is also prices high. Last year the prices were close to $22 – $33 per ton, while the prices are close to $77 – $88 per ton now, which will further increase the cost of production of ethanol from molasses.

 

Though Sorghum to some extent is used to produce ethanol in Maharashtra and Andhra Pradesh, its production is also going down and the prices high. The other option for Indian oil companies and other entrepreneurs is to look at the possibility of utilizing Corn/maize to produce ethanol, which will be sustainable. It will not only produce ethanol, but also Distillers Dried Grains, which is a good livestock feed.

 

Benefits of bio-ethanol

 

• renewable resources
• cleaner environment due to cleaner combustion
•  lower net carbon dioxide emissions
• expanded market opportunity in the agricultural field
• less dependence on foreign crude oil 

Basically alcohol, bioethanol is made from starch plants (grain, mostly corn, and tubers like cassava); sugar plants (sugar beet or sugar cane); and - although large-scale still in the preliminary stages - from cellulose plants. Bioethanol is obtained using biological production technology, which is fermentation and subsequent enrichment by distillation/rectification and dehydration.

 

Avian Influenza again

 

As per the recent report published by WHO, the world is at a risk of an avian flu pandemic and al governments need to step up preparations to avoid any kind of crisis.

 

In order to discuss the situation, WHO has called a summit of flu vaccine makers and nations on Nov 11, 2004. There are fears that the flu is getting established in Asia and there are several cases in humans that cannot be linked directly to exposure to infected poultry.

 

Bird flu describes three deadly strains of avian influenza and are named and numbered for two “H” and “N” proteins on the surface of the virus.

 

The first H5N1 appeared in Hong Kong in 1997, causing 18 human infections and six deaths. It reappeared in 2003 and has caused 44 human cases and 32 deaths throughout Asia.

 

The second strain H9N2, appeared in 1999 in Hong Kong and China, caused 2 human cases in Hong Kong last year. The third, H7N7 appeared in Netherlands in 2003.

 

Regards

Amit Sachdev, Consultant, U S Grains Council
E Mail: bluecross@touchtelindia.net

US corn crop and prices, Biotechnology and feeding the world

US corn crop and prices

  

Harvest in US is not finished as yet. Most farmers target Oct 31 to finish harvest. As the crop size is big, storage of corn will be a major issue. More corn will be stored under temporary storage. Indicative commodity prices at the end of the week were:

 

Corn: $95.50 per MT FOB US Gulf (Nov - Dec deliveries)

Sorghum: $97.50 per MT FOB US Gulf (Nov - Dec deliveries)

Barley: $ 103 - 105 per MT FOB PNW (Oct - Dec deliveries)

 

The detailed market report for the week ending Oct 22, 2004 can be found at.

 

http://www.grains.org/buying/market_perspectives/mp_10-22-04.pdf

 

Though the barge rates are down, the ocean freight rates are firm and not declining due to non availability of ships. Corn prices out of China are down by almost $7 - 10 per MT, which is forcing many to turn to China, due to steep ocean freight rates from US. Though China is still not in the market, many believe some reserves from last year may be available. 

 

As the oil prices continue to rise, China has also forayed into ethanol territory at full throttle. Information available suggests that by the end of this year, gas stations in all five provinces in central and northeastern China are required to replace regular gasoline with gasohol, a blend made of 90% gasoline and 10% ethanol. Gas stations in 27 cities in another four provinces will have to supply the same 10% ethanol-blended gasohol by the end of 2005. This move will further put pressure on China's export commitments as it increases its domestic usage. 

 

Biotechnology and feeding the world

 

On the Biotech front, the 2004 International Biotech Information Conference organized by U S Grains Council and sponsored by Nebraska Corn Board, Iowa Corn Promotion Board and U S Department of Agriculture was an eye opener for many attendees. Those from the science background had no problem in understanding the system, but those with other backgrounds in engineering etc got first hand information about DNA, sequencing and how hybrid and biotech commodity is produced.

 

I was pained to read an article from a learned environmentalist and I quote

"Yes. Consumption of hybrid varieties of food crops have transferred resistant viruses in our bodies, creating super viruses. How else do you explain SARS, bird flu or mad cow disease. Till now diseases never traveled from plant to animals to humans. We have created a tunnel allowing movement of dreaded viruses."

 

The details can be found at                  

http://www.deccanherald.com/deccanherald/oct092004/metro3.asp

 

All those who have misconceptions about DNA, RNA, how hybridization occurs, what makes us and what we eat should look at the presentation by Dr.Lisa L Lorenzen of Iowa State University. The presentation can be found at

http://www.grains.org/pdf/Technology_Education_For_All_Ages.pdf

 

Some facts need to be realized

 

By 2050 the world population will be close to 9 billion, an increase of 3 billion from year 2000. About 840 million people currently suffer from chronic malnutrition world wide. About 1.3 billion are afflicted with poverty. As populations grow, the per capita cultivable land which was over 0.45 hac in 1966 will be reduced to 0.15 hac by 2050. The productivity of staple food is already down. The world grain production which grew by 2.1% in 1980's grew by only 1% per annum in 1990's. In order to feed 9 billion people, the farmers will need to find more sustainable ways to produce food. We will need to double food production sustianably from the same land mass of 1.5 billion hac by 2050. 

 

In 1960 the average corn production in US was around 1.01 MT / acres (40 bushes / acre) and almost all corn acreage was under double cross hybrids.During the same year single cross hybrids were introduced and the productivity jumped from 1 MT in 1960's to about 1.57 MT in 1970. Today in 2004 when all of the US acreage is under single cross hybrids, of which 40% is biotech, the average productivity is close to 3.9 MT / acre. With more advancements and precision agriculture wherein Global Positioning Systems (GPS) are used to map the area and provide specific nutrients to the land the productivity is bound to increase and so are the challenges. In the last 24 years (since 1980), the global corn acreage has grown by 4.8%, while the global corn production has gone up by over 45%. This is all because of better management and more so better genetics and technology.  

 

Thanks to advancement in genetics, better animal breeding systems and availability of more corn, soybean, amino acids, minerals, vitamins and disease fighting vaccines, the poultry and dairy farmers has been able to provide much needed animals protein to the increasing human population. In the last 40 years, the world meat consumption has almost tripled.   

 

As wealth increases, aspirations too go up. People do not wish to age and wish to look young and use new technologies to enhance life expectancy. It is always difficult to adopt new technologies, as it was with microwaves or cell phones, the same is true for biotechnology.

 

I hope we will be able to move forward and use the technology to feed future generations and leave this world a better place to live, in a better environment.      

 

Amit Sachdev
Consultant, U S Grains Council - India
FF 303 G, Sushant Shopping Arcade, Sushant Lok 1
Gurgaon - 122 002 (Haryana), India
Tel: +124-2396539 * Fax: +124-2396209 * Mb: +98110-61516

E mail: bluecross@touchtelindia.net * bluecros@vsnl.com

 

2004 International Biotech Information Conference and USDA crop Report

Camp: Omaha
Date: 16th Oct 2004

2004 International Biotech Information Conference – Day 04

The participants travelled to Omaha, Nebraska on the last day of the conference to see a meat slaughter and meat packing plant. The plant slaughters about 2500 -3000 animals per day, each animal weighing about 600 kg each. The plant follows high hygienic standards and supplied meat for 2004 Olympics. There are 16 federal inspectors on the plant and each animal is inspected before the meat is packed and leaves the plant.

On some questions related to the feeding of GM products to the animals, the manager mentioned that in his 30 years of service in the industry he has not seen any difference in the animals fed on conventional feed material or GM feed ingredients.

The participants were supposed to take a trip of the river and look at the way the commodities travel on the river in barges and are collected at the Cargill elevator (Storage facility) from where they are shipped to the markets, domestic as well as international. The participants were not able to take the trip as the river was low on water and there were no barges being used to haul grain. The company currently is using 100 wagon train to haul grain from its facility to its markets and it takes around 12 hours to fill these 100 wagons. Each train carries 10,000 tons of grain.

The conference ended after a panel discussion on the protocols to be followed for trade and how countries can co-operate to make trade easy among themselves, but still protect their farmers and sovereignty of their respective countries,

In the open session participants pointed out that they are taking back learningÂ’s from this conference and will try to set short term and long term goals on setting up systems in place and making people aware about the current systems. Many misconceptions that they had have been cleared and they will be able to deal better with the questions that are posed to them about the technology in their respective countries and how the products are regulated in different countries. The participants also pointed out that they have to think about the new technology with an open mind and make general public aware about the situation in their own country.

USDA crop report

The corn / soy cop report from USDA was out on Oct 12, 2004. The production is expected to be over 294 million metric tons, with the average productivity of 9.94 tons / hac (against around 2 tons / hac) for India. The prices are reported to be down and ranging between USD 96 – 97 per ton FOB Gulf for Nov – Dec deliveries. The freight rates are still high as china is buying coal as well as iron ore.

Should you need more information about biotechnology or grain trade please feel free to contact me.

Regards
Amit Sachdev

2004 International Biotech Conference - Day 03

Camp: Des Moines
Dated: Oct 15, 2004

2004 International Biotech Conference – Day 03

Day 03, probably was one of the most significant days for the participants. During the visit to the Iowa State University, the participants were provided with the set of information related to biotech in very simple terms as for a lay person. With a demonstration of DNA extraction from Banana, the exercise was made fairly simple and easy to understand on what DNA is and what protein is. A tour of the facilities and a Public Private Partnership system, which provided space, equipment and expertise to new companies was good and may be followed. It allows companies to use the common facilities to start the research on the new technology, without many problems.

The panel discussion at the end of the tour with officer from FGIS, USDA and also training cleared many doubts in the minds of the participants about the regulation of the products produced using the technology. It was clarified that unless and until FGIS and FDA is satisfied with the data provided, the product cannot be commercialized and that the products made using the new technology (GM) and probably much more safer, than their counterparts due to such rigorous checking.

The end of the day brought the participants to the doorstep of the magnificent Iowa State Capital Building. The participants attended the ceremony of the World Food prize and rubbed shoulders with people who have done more for agriculture and creating opportunities for farmers to earn more. The World Food Laureates have helped save more lives than anybody else in the world. It was interesting to note that the of all the world prize recipients, 5 are from India including Dr.M S Swaminathan, Dr.Verghese Kurien, Dr.Gurdev Khush, Dr.B R Barwale and Dr.Surinder Vasal.

2004 International Biotech Conference - Day 2

Camp Des Moines
Dated: 14th Oct, 2004

2004 Biotech Tech Conference

On the first day another interesting event that I missed out was the panel of farmers, US as well as International.

While the US farmers pointed out on why they use the technology and how they have over the last 10 years co-existed with their organic neighbours. It was pointed out clearly out that all the three farmers segments, those using the technology, those not using (but are not opposed to the technology) and those growing organic are happy with the current regulatory mechanism. Also all three segments gave in their impressions on why they use the technology and how it is bringing benefits to them and their community and the society in general.

On the international panel, Mr.Jayapal Reddy, Secretary, Farmers Federation of Andhra Pradesh, India provided his experience of using biotechnology in a seed (GM Cotton) and how it has helped him and his farmer members in producing a better quality crop and making more money, while at the same time saving them selves and the environment by not spaying harmful pesticides.

Representative from South Africa, Mrs.Sabina Koza, Director, Fair Deal Trainig Centre was more enthusiastic about the use of technology and how it has helped her and her members in her co-operative make more money and save more monety for their families.

These were just a few stories of how the technology has helped those who need them the most. There are many more which we do not hear, but they are out there. It is necessary that the correct information about the advantages of the technology is made known to one and all and the right to chose be left on those who wish to use the technology for their own benefit and for the benefit of the society as a whole.

The second day of the conference was spent at Pioneer Hi Bred offices and labs looking at the research labs where the work is going on,, how the trait is selected, inserted and used in the particular crop. The panel discussion at the end of the day at the super market took the participants on a journey of the labelling jargon and how it can affect the product and the consumer.