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.
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