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
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