Corn prices are stable on good monsoon start
Good monsoon sentiments have stabilized the corn prices in India. Though little late the monsoon has covered almost all parts of the country. As per the Indian Meteorological Department (IMD) the deficiency which was 49% on Jun 22, now is only 20%. Due to the delayed rains the sowing though has been affected, but is expected to cover up in the next few days. Reports from Ministry of Agriculture state that the as on June 20 the total area under coarse cereals is only 0.84 million hectares as compared to 1.398 million hectares last year during the same time. The area under corn was only 55% of last year (0.495 mil hac as compared to 0.9 mil hac last year). Bajra was probably the worst affected and was covered only 14% as compared to last year. Jowar (Sorghum) coverage was the highest and covered 114% over last year. With more rains forecast and many parts of the country experiencing flash floods also (Gujarat and Himachal Pradesh), it could be a dicey situation.
All coarse grain prices have stabilized, but are higher than the normal prices this time of the year, partly due to increased demand and lower availability. The Pearl Millet (Bajra) prices are ranging from $124 to $141 per MT for different varieties. The highest price was quoted in Maharashtra at $146 per MT.
Sorghum (Jowar) prices ranged from $158 to $201 per MT and the highest prices was quoted in Rajasthan at $230 per MT for yellow sorghum.
Corn prices ranged from $120 to $139 per MT. The highest prices was quoted in Gujarat at $157 per MT.
Looking at the above prices, the poultry end users are the worst effected. Buying corn from Bihar and transporting it all the way to Gujarat or other parts of the country costs more money. The price of corn imported into India (without duty) at the port will be little higher than the domestic corn prices.
The future prices of corn in India have also gone up. July maize was quoted at Rs.5645 ($129.7) per MT, while August was quoted at Rs.5710 ($131.26). The September corn was quoted at Rs.5695 ($140) per MT.
In the US the CBOT closed lower for July and August than last week. July and August corn were quoted at $2.165 per bushel ($85.23 per MT) and $2.255 per bushel ($88.77 per MT) respectively. The FOB value (US Gulf) were also down to $93 and $95.5 per MT respectively. With the freight cost also low, it just might be feasible to get some corn into India to ease the situation, it the government so desires.
With the plantings almost over in US, it is estimated that 81.6 million hectares of land is under corn, and the biotech plantings are at about 52% of this, about 5% higher than last year.
The detailed Market report from US Grains Council can be found at the following link.
http://www.grains.org/buying/market_perspectives/mp_07-01-05.pdf
World coarse grain crop prospects better in 2005-06 (inputs from worldgrain.com)
According to the International Grains Council, a large coarse grain crop is forecast in 2005-06, at 962 million tonnes, which is short of last year’s record of 1.011 billion.
In its latest report the council has revised the outlook of maize crop and has shown an improvement in Mexico and Argentina. The forecast for barley has been reduced in Australia and EU.
The Council said world coarse grains consumption should fall only modestly in 2005-06, to 963 tonnes, which would broadly match forecast output and compares with 2004-05 consumption of an estimated 964 million.
If production and consumption forecasts are realized, world coarse grains carryover stocks would virtually remain unchanged, at 176 million tonnes versus 177 million in 2004-05, but much higher than 2003-04 stocks of 135 MMT. Stocks of maize are set to increase by 5 MMT while that of barley are set to decrease.
Maize production is expected to decline by around 5% from last year’s record to 673.7 million tonnes, based on reduced yields in the U.S. and smaller crops in the E.U. and the Commonwealth of Independent States. However, the total is somewhat higher than forecast a month ago, with estimates lifted for Argentina and Mexico.
World maize consumption is expected to be close to last year’s level, with U.S. use underpinned by fast-rising ethanol output, and a fall in the E.U. balanced by increases in China and Brazil.
For wheat, global production is forecast at around 604 million tonnes, unchanged from the Council’s estimate a month ago. The Council trimmed forecasts for Australia, Canada and India and increased them for Russia, Ukraine and China. While GOI has maintained a production of 72 MMT, some trade circles are of the opinion that the production of wheat is close to 66 MMT, which will make India grain deficit to a large extent. Even if the production of 70 MMT is considered as estimated by some other, the shortfall of over 2 MMT is forecast due to higher requirements.
Though rains have given respite to Australia, it could not prevent area reduction, while recent rains in Argentina have prevented further deterioration in wheat crop prospects.
World wheat consumption in 2005-06 is estimated at 608 million tonnes, about 4 MMT below 2004-05 due to lower feed use, it is set to exceed production.
High crude oil prices: When will be the time to think about ethanol from Corn in India
Crude oil prices touched over $60 per barrel and slowly eased to $50 last week. Trade believes the high price is there to stay. The increased oil prices forced an increase in petrol and diesel prices in India. With price hikes, there is a new interest in Corn-based Fuels. Will it be possible to insulate ourselves from these price increases?
Getting your car filled up is a painful experience all over the world and energy is needed to move about. Those who will have the insulation of not being dependent on outside world for energy will rule the world. There are almost 4 Million vehicles in the US which cal run on E85 – a blend of 85% ethanol and 15% gasoline (Petrol). And almost all cars can run on a normal gasoline blend of 10% ethanol and 90% gasoline.
With the new technology it is now possible to turn corn ethanol into bio diesel as well. The new technology will substantially increase the supply of the fuels, ethanol and bio diesel and will add a revenue stream which will increase the economics of the ethanol plant. Few plants are already using the technology and more will start using it. As per the reports, a new plant will be coming up in US by next year which will produce 190 million liters of bio diesel per year.
Currently there are 85 plants in US producing 14.44 billion liters of ethanol per year. Another 15 are being constructed. Most corn producing states like Iowa, Nebraska have experienced better returns to corn producers due to the growing ethanol industry.
With the new technology, the market for two alternative fuels, ethanol and bio diesel have merged, which will be beneficial to the consumer as well as the farmer, and will further reduce the burden on the country. “The use of these alternative fuels will help the environment and make US less dependent on foreign Oil”, says an industry expert.
The Ministry of Petroleum and Natural Gas, Government of India has plans to set up a separate Department of energy, which will source energy for India. It is time for Government of India to realize the potential of grains to produce alternative fuels. Currently under grains only Sorghum (Jowar) can be used to produce ethanol in India. If corn can be allowed to be used to produce ethanol and bio-diesel it can give a big boost to the farming community as well provide the source of energy at a much cheaper rate.
There are myths surrounding the production of ethanol from corn. The production of ethanol does not translate into less grain available for food, since farmers do not grow more or less corn based on ethanol production.
Ethanol production uses field corn—most of which is fed to livestock, not humans. In fact, only the starch portion of the corn kernel is used to produce ethanol. The vitamins, minerals, proteins and fiber are converted to other products including sweeteners, corn oil and high-value livestock feed—feed which helps livestock producers add to the overall food supply.
A January 2005 study by LECG, a global consulting company found that the ethanol industry powered the US economy by creating more than 147,000 jobs, mostly in rural areas. The industry boosted U.S. household income by $4.4 billion and eliminated the need to import 143.3 million barrels of oil, a saving of $7.16 billions based on a price of $50 per barrel. Even if India can start ethanol production in a small way, there are a lot of people who will benefit apart from the environment.
For more information on ethanol production and systems, please visit the National Corn Growers Website or click on the link below
http://www.ncga.com/ethanol/main/index.htm
If you need more information, please feel free to contact me.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
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