Commodity prices: A mixed bag
Rains lashed parts of Maharashtra, Gujarat and Andhra Pradesh and might affect the production of grains and oilseeds in these belts. Flooding was reported from Godhra, Baroda in Gujarat, Kakinada, Vijaywada and surrounding areas in Andhra Pradesh and Bombay and surrounding areas in Maharashtra. Areas around Godavari river in Andhra Pradesh have been hit very badly and the floods are likely to affect Paddy, Chilli and Sugarcane in these areas. Coarse cereal production may also be hit in the affected areas.
In the midweek the average prices were higher for some and lower for some, a mixed bag. While prices for Bajra (Pearl Millet) were reported to go up from $130 to $149 per MT, prices of Barley reported a downtrend from $162 to $157 per MT. Grain sorghum prices also were lower from $166 to $143 per MT in the week. This could be due to less of buyers and low supply or lower quality stocks as this is the fag end of the crop season. The maize prices were a tad lower than last week and came lower by $1 per MT from $129 to $128 per MT. At the end of the week the prices for certain varieties were again higher and average price was up to $130 per MT. The average prices for Yellow, Kesari & Red varieties were although much higher and ranged from $136 - $138 per MT.
In US hurricane Rita lashed the coast of Louisiana and Texas and the city of New Orleans was hit once again. Reports indicate two refineries being damaged which is likely to affect supply of gasoline in parts of US.
The grain prices were however reported lower. For Dec 2005, the CBOT was reported at $81.66 per ton and the FOB value at $100 per ton (US Gulf). The barge / rail and ocean freight rates continued their upward trend last week.
US Grains Council completes 2nd Poultry Meat Inspection Training workshop in India
The 2nd Poultry Meat Inspection Training workshop, organized by U S Grains Council from Sept 18 – 23, 2005 at Coimbatore had a very encouraging response. Sixteen participants including officers from Ministry of Food Processing Industries, Government of India from North, South and East offices and production managers of some of the private poultry slaughter facilities in south India attended the workshop. The areas covered included, US poultry meat inspection systems, HACCP guidelines, post mortem findings, food safety issues, temperature abuse during transport and retail and affect on meat quality.
Few of the major recommendations included:
1. Regulation of live markets by the local authorities on the initiative by the traders and the poultry industry.
2. Poultry industry associations to approach the Federation of Hotel & Restaurant Associations of India (FHRAI) and help set norms for purchase of meat and meat products from registered suppliers.
3. The industry needs to work closely with packing material suppliers and institutes to provide good packaging material which is cheap, but at the same time safe and food grade.
4. Customer education is a vital tool and creating awareness about quality and food safety issues will be important factor in promoting chilled and processed poultry meat and meat products.
5. Whole sale and retail chain management in selling chilled and frozen products is vital and those involved in the segment will need to be made aware of the food safety issues.
The Ministry of Food Processing Industries, Government of India has principally agreed to include chilled and frozen chicken in its list of products. As soon as it is notified, the processing plants will need to register their plants with Ministry of Food Processing Industries and will obtain a plant number, which will need to be displayed on the packet along with the MFPI Logo. The companies will be able to promote this and will have an advantage over those whose plants will not be registered or those selling poultry meat sourced from unregistered sources.
In the long run, the registration of the plants will help the industry to create consumer confidence and expand the market much more. Currently only 5% of the broilers produced are processed mechanically under hygienic conditions. An increased consumer confidence will certainly help in increasing this share. In addition, it will be possible for the industry to grow much more than its 10% per year current growth.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
Sept 26, 2005
Monday, September 26, 2005
Monday, September 19, 2005
Rains in India and production estimates; U S Production estimates; CLFMA Symposium ends with a set of recommendations
Rains in India and production estimates
Rains in most of the parts of the country North, west and east have brought in respite from the severe heat, but could also damage crops if the rains continue. Some area like Punjab, Haryana, Himachal Pradesh, Orrisa have experienced rains that could damage crops like cotton, coarse cereals and rice.
Government of India came out with the first estimates for the food production for the year 2005-06 last week. The Corn production for 2005-06 is pegged at 12.17 MMT. The fourth estimates for 2004-05 estimate the corn production at 11.6 MMT. This is inline with industry estimates for the year 2004-05. The requirement for 2004-05 was close to 13.19 MMT, while in 2005-06 the requirement of corn is pegged at 13.73 MMT. The lower production will surely put pressure on corn and increase prices in the long run.
The major loss is reported in Soybean crop, production of which is expected to be down by 12.4% due to delayed rains.
The CBOT quoted lower by about $3.74 per ton for Dec corn. The FOB prices however remained unchanged at $102.5 per MT. The freight rates are going up steadily and might continue to gain.
U S Production estimates
USDA came up with the report on Sept 12, 2005 and the estimates for corn production have been increased from 262 MMT from August 2005 report to 270 MMT. The increase is mostly due to better than expected yield and a very early corn harvest that is already underway. The yield is estimated at 3.63 tons / acre (8.99 tons / hac) against 3.53 tons / acre (8.71 tons / hac) in the August report. In 2004-05 the productivity was 4.07 tons/acre (10.07 tons / hac). India has the average yield of 0.73 – 0.8 tons / acre (1.8 – 2.0 ton/hac) in corn. Though there are areas where the productivity is higher as well. USDA also came out with the world production numbers and the productivity in China (2.54 times), Argentina (3.45 times), Brazil (1.79 times), South Africa (1.56 times) and Mexico (1.5 times) is also higher than India.
The corn usage in US has also been estimated. In fiscal 2006, the usage in Feed and residual use is expected to be 148 MMT as against 156 MMT in 2004-05. The use in feed and industrial sector is expected to be higher at 72 MMT as against 68 in 2004-05. Use by ethanol sector is also expected to be higher at 38 MMT in Fy 2006 as against 33 MMT in FY 2005.
CLFMA Symposium ends with a set of recommendations
The CLFMA symposium that was held in Goa on Sept 16 – 17, 2005 had a theme of ‘Safety First – Farm to Fork’ ended with a set of recommendations being given to Government of India. The major one being setting standards for inputs (feed) and output (food) and making then mandatory.
Though there has always been interest in exports, but concern was raised on competitiveness of Indian produce in the wake of government policies which do not allow import of major inputs like grand parent stocks, vaccines, feed inputs (corn and soybean meal) and putting in barriers. Government was asked to allow import of corn and soybean meal of zero tariff and make it possible for Indian produce to be competitive in the world market.
Another major concern raised by the house was the taxation on the processed chicken, which unduly increased the prices and made safe and hygienically produced products expensive for the consumer. It was recommended that the exemptions be given to the processing sector so as the sector can utilize their capacities efficiently and provide safe food to the consumers at affordable prices.
Dr.James Denton, consultant with U S Grains Council in his presentation to a 300 strong gathering pointed out facts and spelt clearly that industry needs to consider consumer protection in the wake of food safety. This is for all consumers, outside the country or in the country. Consumers buy products on quality and food safety is an inherent part of quality. Food safety is the prerogative of the industry and governments can only provide oversight.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
Reporting from Coimbatore, Sept 19, 2005
Rains in most of the parts of the country North, west and east have brought in respite from the severe heat, but could also damage crops if the rains continue. Some area like Punjab, Haryana, Himachal Pradesh, Orrisa have experienced rains that could damage crops like cotton, coarse cereals and rice.
Government of India came out with the first estimates for the food production for the year 2005-06 last week. The Corn production for 2005-06 is pegged at 12.17 MMT. The fourth estimates for 2004-05 estimate the corn production at 11.6 MMT. This is inline with industry estimates for the year 2004-05. The requirement for 2004-05 was close to 13.19 MMT, while in 2005-06 the requirement of corn is pegged at 13.73 MMT. The lower production will surely put pressure on corn and increase prices in the long run.
The major loss is reported in Soybean crop, production of which is expected to be down by 12.4% due to delayed rains.
The CBOT quoted lower by about $3.74 per ton for Dec corn. The FOB prices however remained unchanged at $102.5 per MT. The freight rates are going up steadily and might continue to gain.
U S Production estimates
USDA came up with the report on Sept 12, 2005 and the estimates for corn production have been increased from 262 MMT from August 2005 report to 270 MMT. The increase is mostly due to better than expected yield and a very early corn harvest that is already underway. The yield is estimated at 3.63 tons / acre (8.99 tons / hac) against 3.53 tons / acre (8.71 tons / hac) in the August report. In 2004-05 the productivity was 4.07 tons/acre (10.07 tons / hac). India has the average yield of 0.73 – 0.8 tons / acre (1.8 – 2.0 ton/hac) in corn. Though there are areas where the productivity is higher as well. USDA also came out with the world production numbers and the productivity in China (2.54 times), Argentina (3.45 times), Brazil (1.79 times), South Africa (1.56 times) and Mexico (1.5 times) is also higher than India.
The corn usage in US has also been estimated. In fiscal 2006, the usage in Feed and residual use is expected to be 148 MMT as against 156 MMT in 2004-05. The use in feed and industrial sector is expected to be higher at 72 MMT as against 68 in 2004-05. Use by ethanol sector is also expected to be higher at 38 MMT in Fy 2006 as against 33 MMT in FY 2005.
CLFMA Symposium ends with a set of recommendations
The CLFMA symposium that was held in Goa on Sept 16 – 17, 2005 had a theme of ‘Safety First – Farm to Fork’ ended with a set of recommendations being given to Government of India. The major one being setting standards for inputs (feed) and output (food) and making then mandatory.
Though there has always been interest in exports, but concern was raised on competitiveness of Indian produce in the wake of government policies which do not allow import of major inputs like grand parent stocks, vaccines, feed inputs (corn and soybean meal) and putting in barriers. Government was asked to allow import of corn and soybean meal of zero tariff and make it possible for Indian produce to be competitive in the world market.
Another major concern raised by the house was the taxation on the processed chicken, which unduly increased the prices and made safe and hygienically produced products expensive for the consumer. It was recommended that the exemptions be given to the processing sector so as the sector can utilize their capacities efficiently and provide safe food to the consumers at affordable prices.
Dr.James Denton, consultant with U S Grains Council in his presentation to a 300 strong gathering pointed out facts and spelt clearly that industry needs to consider consumer protection in the wake of food safety. This is for all consumers, outside the country or in the country. Consumers buy products on quality and food safety is an inherent part of quality. Food safety is the prerogative of the industry and governments can only provide oversight.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
Reporting from Coimbatore, Sept 19, 2005
Saturday, September 10, 2005
Commodity Prices and Monsoon Panic; Motorists want ethanol as oil prices soar;USGC 2nd Poultry Meat Inspection Training Course in Coimbatore
Commodity Prices and Monsoon Panic
Over the last week, the commodity prices have increased rapidly. This increase can be attributed to two things.
1. Monsoon Panic
2. Low stocks in the market viz a viz higher demand
As regards monsoon panic, IMD has predicted few rains in North India. More rains are predicted in South and Western parts of the country, especially Maharathtra. Within the next one week, heavy rainfall is predicted in west coast (www.monsoondata.org), while most of North India will remain parched. The temperatures in the next one week are also predicted to reach over 30 degrees C in parts of Rajasthan, Haryana, Punjab and Delhi.
Based on the data available from IMD, monsoon has left fields parched in Western Rajasthan (-39%), Western UP (-28%), Haryana (-23%), Delhi & Punjab (-22%). Due to deficient rains in North India the crops that are likely to be effected are Sugarcane, Rice, Coarse cereals (maize, Jowar and bajra) and Oilseeds, in states of Uttar Pradesh, Punjab, Haryana, Rajasthan, Jharkhand and Bihar
Within the last one week, average prices of all coarse cereals have gone up. The major gainer being Barja +8.5%, Barley +9.96%, Jowar (Grain Sorghum) +14.5%. Corn is the only commodity prices of which has shown a very small increase of 2.8% as most of the end users are covered till the new crop arrives in the market.
CBOT closed a little lower than last week. Sept corn was $2.03 per bushel ($79.98 per MT) as against $2.0350 per bushel ($80.18 per MT) last week. Dec corn closed at $2.1675 ($85.39 per MT), lower than last week’s 2.1775 per bushel ($85.79 per MT)
The trade awaits the Sept 12, 2005 USDA report. As per the industry report, corn production estimates will again be lowered and the producted is estimated to be close to 10.288 billion bushels (261 MMT) (Average 10.027 – 10.595 billion bushels) (254 – 269 MMT) as against last months 10.35 billion bushels (262 MMT) report. The decrease in production is being attributed to high temperature in the corn belt.
Motorists want ethanol as oil prices soar (from various sources)
Motorists around the world are looking for cheaper fuels to run theor cars. Bio fuels have shown the way and more and more people in US, Brazil, Europe are filling their cars with more biofuels, such as ethanol made from sugar cane or corn, in the hunt for cheaper alternatives to high gasoline prices. Even before the recent surge in crude prices, countries in the Americas, Europe, Asia including India and Africa were integrating biofuels into national energy plans. France and China also plan to step up the adoption of renewable energies.
In the latest U.S. ethanol production data, output in the month of June set a record of 249,000 barrels a day and demand was growing even faster, hitting 277,000 barrels a day. Ethanol production as it is practiced in the United States -- the world's biggest fuel market -- and Europe using grain or sugarbeet, only began to become economically competitive with gasoline when world oil prices rose above $40 a barrel. On Tuesday, Sept 06, 2005 at the NYMEX futures exchange in New York, crude for October delivery was trading at nearly $66, down from last week's peak close to $71. Expects are of the opinion that the market could run to new highs should supply disruptions or an unexpected rise in demand emerge.
The explosion in demand has come from the development of flex-fuel car engines which can run on gasoline, ethanol or any blend, whichever is cheapest. Brazil, in recent years, has used about 45 percent of its cane crop for ethanol production, the rest for sugar production. In 2005, brazil is expected to use more than 51 percent of its cane crop for ethanol production because of demand from flex-fuel cars.
In India ethanol is made from molasses, after sugar has been extracted, which would possibly increase the cost of production. India is the largest consumer of sugar and if the current situation prevails, India is likely to import 1.5 MMT of raw sugar this season to bridge the demand and supply gap. The gap is likely to remain till 2006-07.
Ethanol fuel, also used as a gasoline additive to reduce pollution, a substitute for lead and sulfur and to extend gasoline stocks, is just emerging as a commodity on the global market. Ethanol futures contracts that debuted in March at the Chicago Board of Trade.
Effective use of By products
As the use of corn based Ethanol in increases, the use of Dried Distillers Grain with solubles is also gaining support. Countries like Korea, Vietnam and experimenting with DDGS in total mix rations (TMR) to be used for feeding heifers, calves and lactating cows.
It is rather difficult to gauze the market for DDG as the ethanol plants are spread across the country and the prices range from $75 in the northern plains, to $90 in Kansas and Missouri and $116 in California. (All prices are FOB basis).
USGC 2nd Poultry Meat Inspection Training Course in Coimbatore
After the success of the 1st Poultry Meat Inspection Training Course conducted by U S Grains Council in April 2005 in Bombay, the council is all geared to start its 2nd Poultry Meat Inspection Training Course in Coimbatore from Sept 18–23, 2005. About 15 participants from Ministry of Food processing Industries and private sector processing plants are expected to attend.
The attendees will receive information on US poultry inspection systems, HACCP based inspection model, Port mortem findings, chilling and freezing, packing and transport. Information on retail chain systems and food safety issues related to meat handling will be provided to the participants.
Currently no chicken being sold in the market is inspected by a government agency and certified as wholesome. Almost 95% of the chicken sold in India is traded as live and slaughtered in the streets on shops as per the requirement of the customers. This slaughter is under unhygienic conditions.
Though several municipalities have issued orders to stop street slaughter the same have not been implemented as there is no infrastructure for mechanical slaughter and the officers are not trained to inspect the poultry meat. The Ministry of Food Processing Industries, Government of India has finalized the guidelines for inclusion of chilled and frozen chicken in its mandate under Meat Food products Order of 1973. Currently MFPO covers value added products and does nor cover raw poultry meat.
Sale of inspected poultry meat is expected to boost sales and consumer confidence. As integration is set to make inroads in almost all poultry belts, the consumers can expect a better product at a good price. Integration will also aim to remove the middlemen from the system and provide a direct link between the farmer –processor and the consumer.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
Sept 10, 2005
Over the last week, the commodity prices have increased rapidly. This increase can be attributed to two things.
1. Monsoon Panic
2. Low stocks in the market viz a viz higher demand
As regards monsoon panic, IMD has predicted few rains in North India. More rains are predicted in South and Western parts of the country, especially Maharathtra. Within the next one week, heavy rainfall is predicted in west coast (www.monsoondata.org), while most of North India will remain parched. The temperatures in the next one week are also predicted to reach over 30 degrees C in parts of Rajasthan, Haryana, Punjab and Delhi.
Based on the data available from IMD, monsoon has left fields parched in Western Rajasthan (-39%), Western UP (-28%), Haryana (-23%), Delhi & Punjab (-22%). Due to deficient rains in North India the crops that are likely to be effected are Sugarcane, Rice, Coarse cereals (maize, Jowar and bajra) and Oilseeds, in states of Uttar Pradesh, Punjab, Haryana, Rajasthan, Jharkhand and Bihar
Within the last one week, average prices of all coarse cereals have gone up. The major gainer being Barja +8.5%, Barley +9.96%, Jowar (Grain Sorghum) +14.5%. Corn is the only commodity prices of which has shown a very small increase of 2.8% as most of the end users are covered till the new crop arrives in the market.
CBOT closed a little lower than last week. Sept corn was $2.03 per bushel ($79.98 per MT) as against $2.0350 per bushel ($80.18 per MT) last week. Dec corn closed at $2.1675 ($85.39 per MT), lower than last week’s 2.1775 per bushel ($85.79 per MT)
The trade awaits the Sept 12, 2005 USDA report. As per the industry report, corn production estimates will again be lowered and the producted is estimated to be close to 10.288 billion bushels (261 MMT) (Average 10.027 – 10.595 billion bushels) (254 – 269 MMT) as against last months 10.35 billion bushels (262 MMT) report. The decrease in production is being attributed to high temperature in the corn belt.
Motorists want ethanol as oil prices soar (from various sources)
Motorists around the world are looking for cheaper fuels to run theor cars. Bio fuels have shown the way and more and more people in US, Brazil, Europe are filling their cars with more biofuels, such as ethanol made from sugar cane or corn, in the hunt for cheaper alternatives to high gasoline prices. Even before the recent surge in crude prices, countries in the Americas, Europe, Asia including India and Africa were integrating biofuels into national energy plans. France and China also plan to step up the adoption of renewable energies.
In the latest U.S. ethanol production data, output in the month of June set a record of 249,000 barrels a day and demand was growing even faster, hitting 277,000 barrels a day. Ethanol production as it is practiced in the United States -- the world's biggest fuel market -- and Europe using grain or sugarbeet, only began to become economically competitive with gasoline when world oil prices rose above $40 a barrel. On Tuesday, Sept 06, 2005 at the NYMEX futures exchange in New York, crude for October delivery was trading at nearly $66, down from last week's peak close to $71. Expects are of the opinion that the market could run to new highs should supply disruptions or an unexpected rise in demand emerge.
The explosion in demand has come from the development of flex-fuel car engines which can run on gasoline, ethanol or any blend, whichever is cheapest. Brazil, in recent years, has used about 45 percent of its cane crop for ethanol production, the rest for sugar production. In 2005, brazil is expected to use more than 51 percent of its cane crop for ethanol production because of demand from flex-fuel cars.
In India ethanol is made from molasses, after sugar has been extracted, which would possibly increase the cost of production. India is the largest consumer of sugar and if the current situation prevails, India is likely to import 1.5 MMT of raw sugar this season to bridge the demand and supply gap. The gap is likely to remain till 2006-07.
Ethanol fuel, also used as a gasoline additive to reduce pollution, a substitute for lead and sulfur and to extend gasoline stocks, is just emerging as a commodity on the global market. Ethanol futures contracts that debuted in March at the Chicago Board of Trade.
Effective use of By products
As the use of corn based Ethanol in increases, the use of Dried Distillers Grain with solubles is also gaining support. Countries like Korea, Vietnam and experimenting with DDGS in total mix rations (TMR) to be used for feeding heifers, calves and lactating cows.
It is rather difficult to gauze the market for DDG as the ethanol plants are spread across the country and the prices range from $75 in the northern plains, to $90 in Kansas and Missouri and $116 in California. (All prices are FOB basis).
USGC 2nd Poultry Meat Inspection Training Course in Coimbatore
After the success of the 1st Poultry Meat Inspection Training Course conducted by U S Grains Council in April 2005 in Bombay, the council is all geared to start its 2nd Poultry Meat Inspection Training Course in Coimbatore from Sept 18–23, 2005. About 15 participants from Ministry of Food processing Industries and private sector processing plants are expected to attend.
The attendees will receive information on US poultry inspection systems, HACCP based inspection model, Port mortem findings, chilling and freezing, packing and transport. Information on retail chain systems and food safety issues related to meat handling will be provided to the participants.
Currently no chicken being sold in the market is inspected by a government agency and certified as wholesome. Almost 95% of the chicken sold in India is traded as live and slaughtered in the streets on shops as per the requirement of the customers. This slaughter is under unhygienic conditions.
Though several municipalities have issued orders to stop street slaughter the same have not been implemented as there is no infrastructure for mechanical slaughter and the officers are not trained to inspect the poultry meat. The Ministry of Food Processing Industries, Government of India has finalized the guidelines for inclusion of chilled and frozen chicken in its mandate under Meat Food products Order of 1973. Currently MFPO covers value added products and does nor cover raw poultry meat.
Sale of inspected poultry meat is expected to boost sales and consumer confidence. As integration is set to make inroads in almost all poultry belts, the consumers can expect a better product at a good price. Integration will also aim to remove the middlemen from the system and provide a direct link between the farmer –processor and the consumer.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
Sept 10, 2005
Saturday, September 03, 2005
Monsoon Perils and Grain Production; Kartina and its after effects
Monsoon Perils and Grain Production
It may not be official as yet, but monsoon seems to be over as of now. Officially the monsoon season ends on Sept 30 and there would a 10% deficit then, if there is a little progress. Current deficit is about 6%. The areas in the deficit zone are west Rajasthan; west Uttar Pradesh; Jharkhand; Nagaland-Manipur-Mizoram-Tripura; coastal Andhra Pradesh and western Madhya Pradesh. Reports suggest that the soya crop which is the main crop of the area (Madhya Pradesh and parts of Rajasthan) is in danger of withering, if there is no rainfall in the next 2 – 3 days.
As per Indian Meteorological Department, a new touch is forming which might bring rainfall over all four southern States, Kerala, Karnataka, Tamil Nadu and Andhra Pradesh in the next 2 – 3 days.
Amidst all this talk about monsoon, the grain prices have shown an upoward trend. Yellow corn prices averaged at Rs.6010 ($138) per MT. The local corn traded at Rs.6900 ($159) per MT. The highest prices were reported in Gujarat. The harvest still about a month away, increased prices will effect the maize user industries, bring down profits.
The prices in US remained almost same as last week. CBOT closed at $2.035 per bushel ($80.18 per MT) for September delivery. The December delivery was marginally lower than last week at $2.1725 per bushel ($85.60 per MT). The FOB prices were $102 per MT for October and $104 per MT for November delivery.
The freight rates are expected to go up higher in the wake of Kartina, higher demand of grains in the world market and higher fuel prices.
As regards increased demand in the world, China's grain demand is predicted to continue its slow growth in the next four years, with grain consumption increasing 0.9 percent annually. In India as per the analysis the maize demand is expected to grow by 4.1 percent in 2005-06, whereas the production is expected is decrease by about 5.7% over last year. The increase in consumption is due to the increased broiler placement and the decreased production of corn due to the erratic monsoon.
Kartina and its after effects
The start of the week saw hurricane Katrina hitting the US gult coast and hitting it hard with 232 km per hour winds, damaging property worth billions of dollars and taking almost 10,000 lives (No one can predict, but the number was an estimate given by CNN.com).
The hurricane has damaged the city of New Orleans, the port of New Orleans, refineries in the Gulf of Mexico and the rail link between Mississippi and New Orleans.
The port handles almost 62 percent of all grain and soy that is exported out of US. The grain travels by barges and rail cars to the port and is loaded to the ships. On any given day 2 millions bushels (50813 tons) of grain leaves US. If there is any stoppage of the trade due to the closure of the port, it will have a cascading effect. Due to the current slowdown, the effect can already be felt. With harvest round the corner, the pressure to store the new crop will be immense. Some analysts have forecasted losses to the $1 billion on account of disrupted traffic, another $ 1 Billion is estimated on account of crop losses in Louisiana, Mississippi, Alabama, Florida and Tennessee.
The biggest danger is that Katrina has seriously damaged Gulf Coast refineries, which account for 10% of U.S. refining capacity. Experts warned that gasoline prices -- driven higher because of storm-related damage to the Gulf Coast's energy infrastructure -- were the greatest concern and might be approaching levels that would soon ripple through the economy. If that happens, prices of basic items could soar, pushing up inflation. As per reports the gasoline prices are already touching $3.55 per gallon (Rs.40.85 per litres).
With the grain movement being slow the and likely to remain slow for coming months, the world will probably be little starved and possibly taking prices a little higher.
India may also be in shock, if the world prices of crude oil go up. Indian Oil Corporation has already states that Government should increase the price of gasoline by Rs.7.50 per litre ($0.17 per litre) and diesel by Rs.5.00 per litre ($0.11 per litre). What would be the effect of this on inflation, probably no one has guessed.
Regards
Amit Sachdev
bluecross303@gmail.com
Sept 03, 2005
It may not be official as yet, but monsoon seems to be over as of now. Officially the monsoon season ends on Sept 30 and there would a 10% deficit then, if there is a little progress. Current deficit is about 6%. The areas in the deficit zone are west Rajasthan; west Uttar Pradesh; Jharkhand; Nagaland-Manipur-Mizoram-Tripura; coastal Andhra Pradesh and western Madhya Pradesh. Reports suggest that the soya crop which is the main crop of the area (Madhya Pradesh and parts of Rajasthan) is in danger of withering, if there is no rainfall in the next 2 – 3 days.
As per Indian Meteorological Department, a new touch is forming which might bring rainfall over all four southern States, Kerala, Karnataka, Tamil Nadu and Andhra Pradesh in the next 2 – 3 days.
Amidst all this talk about monsoon, the grain prices have shown an upoward trend. Yellow corn prices averaged at Rs.6010 ($138) per MT. The local corn traded at Rs.6900 ($159) per MT. The highest prices were reported in Gujarat. The harvest still about a month away, increased prices will effect the maize user industries, bring down profits.
The prices in US remained almost same as last week. CBOT closed at $2.035 per bushel ($80.18 per MT) for September delivery. The December delivery was marginally lower than last week at $2.1725 per bushel ($85.60 per MT). The FOB prices were $102 per MT for October and $104 per MT for November delivery.
The freight rates are expected to go up higher in the wake of Kartina, higher demand of grains in the world market and higher fuel prices.
As regards increased demand in the world, China's grain demand is predicted to continue its slow growth in the next four years, with grain consumption increasing 0.9 percent annually. In India as per the analysis the maize demand is expected to grow by 4.1 percent in 2005-06, whereas the production is expected is decrease by about 5.7% over last year. The increase in consumption is due to the increased broiler placement and the decreased production of corn due to the erratic monsoon.
Kartina and its after effects
The start of the week saw hurricane Katrina hitting the US gult coast and hitting it hard with 232 km per hour winds, damaging property worth billions of dollars and taking almost 10,000 lives (No one can predict, but the number was an estimate given by CNN.com).
The hurricane has damaged the city of New Orleans, the port of New Orleans, refineries in the Gulf of Mexico and the rail link between Mississippi and New Orleans.
The port handles almost 62 percent of all grain and soy that is exported out of US. The grain travels by barges and rail cars to the port and is loaded to the ships. On any given day 2 millions bushels (50813 tons) of grain leaves US. If there is any stoppage of the trade due to the closure of the port, it will have a cascading effect. Due to the current slowdown, the effect can already be felt. With harvest round the corner, the pressure to store the new crop will be immense. Some analysts have forecasted losses to the $1 billion on account of disrupted traffic, another $ 1 Billion is estimated on account of crop losses in Louisiana, Mississippi, Alabama, Florida and Tennessee.
The biggest danger is that Katrina has seriously damaged Gulf Coast refineries, which account for 10% of U.S. refining capacity. Experts warned that gasoline prices -- driven higher because of storm-related damage to the Gulf Coast's energy infrastructure -- were the greatest concern and might be approaching levels that would soon ripple through the economy. If that happens, prices of basic items could soar, pushing up inflation. As per reports the gasoline prices are already touching $3.55 per gallon (Rs.40.85 per litres).
With the grain movement being slow the and likely to remain slow for coming months, the world will probably be little starved and possibly taking prices a little higher.
India may also be in shock, if the world prices of crude oil go up. Indian Oil Corporation has already states that Government should increase the price of gasoline by Rs.7.50 per litre ($0.17 per litre) and diesel by Rs.5.00 per litre ($0.11 per litre). What would be the effect of this on inflation, probably no one has guessed.
Regards
Amit Sachdev
bluecross303@gmail.com
Sept 03, 2005
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