Commodity Update
At the end of the year, we need to understand one fact that the markets be in bullion, stocks, commodities or real estate, peaked. Most of this was due to easy availability of funds. Looking at two of the commodities
Barley
The week started with fairly high prices touching $196 per MT (at market yards), which by mid week had risen to $ 200 per MT. Some varieties did show a drop in prices due to quality issues. The trend of high prices is likely to continue, till the new crop comes into the market, which will be in April 2006.
Reports available indicate a better barley crop in 2006 and the market will see a drop in prices. In the year 2004, the area under barley was 0.773 million ha, which this year (2005) is up by 5.56% to 0.816 million ha.
The malt industry though specifies the varieties, but due to the poor availability, it should buy what is available in the market and most times, there is no varietal purity.
Corn
The week started with a mixed note, with some varieties touching a high of $140 - $142 per MT at the market yard and staying the at the same level till mid week and ending lower. Sone varieties did start low at $112 per MT, but achieved a high at $139 by mid week and went down by the end of the week. The average prices though remained same at $129-130 per MT though out the week.
Prices in the production states particularly in Karnataka are ruling at a very low level ($106-108 per MT) at the market yard and the state is fulfilling the requirements of states like Maharashtra, Tamil Nadu, Gujarat to a large extent. Reports available also indicate movement of large quantities of corn to Bangladesh as well to fulfil its requirements. The poultry industry in Bangladesh is growing at overt 25% and the demand of corn is about 900 TMT and more than 50% of its requirement is met from India.
The market year for corn 2005-06 started on a high note and prices in all the areas have remained high all through the season except in Karnataka, where the production was very good. In all other areas production was higher and highly unlikely that the prices will come down in the year as the demand increases.
The highest average price of corn in Dec 2004 was $121 and the lowest being $113.5 per MT at the end of the month. In Dec 2005, the lowest was $122 per MT and the highest $130 per MT, which is about 14% higher than last year prices at the same time.
On Dec 30, 2005 the corn at CBOT closed at $2.15 per bushel ($84.62 per MT), similar to to last week closing of $84.37 per MT. The FOB value (US Gulf) would be close to $106 per MT.
Rabi Planting
As on Dec 25, 2005, Wheat & Barley planting is reported up 2.5% and 5.56% respectively. Planting of Corn and Jowar is down by 3.5% and 5.76% respectively. In addition Rice planting is also down by 1.88% from last year.
Delivery Costs
Currently all commodities in India are bagged and transported by trucks, which are in most cases overloaded. The new directive from the honourable Supreme Court, would not over loading of trucks, which would mean increase in freight rates and ultimately cost of commodities at the end users point.
Is Europe going soft on Biotech?
A draft note circulated by European Commission last week authorises contamination of biotech products in organic agriculture. The new draft allows 0.9% GM contaminated agriculture product to be labelled as organic, which is contrary to the current legislation.
Another report also indicates that WTO has ruled in favour of US challenge of EU import restrictions which do not allow sale of biotech foods in United Kingdom and European Union states. Based on the ruling, biotech products will be available in UK and EU and food processors in US, Canada, Argentina and Australia will be allowed to sell processed foods containing biotech products in UK and EU. The products could be corn chips, tortillas, bread products, biscuits and ready meals. The reports says, “WTO has decided that attempt by EU nations to slow approvals for GM (biotech) foods or ban them outright – amounts to illegal restraint of free trade”.
In the year 2005 as per USDA data, EU (25) purchased Corn Gluten meal HS code 2303100010 worth $26.77 million, Corn Gluten Feed HS code 2303100020 worth $199 million and Soybean Meal HS code 2304000000 worth $16.36 million. More information is available on the following link.
http://www.fas.usda.gov/ustrdscripts/USReport.exe
The CGM, CGF and SBM are used to feed the poultry and livestock and the products are not labelled as on date.
New laws to safeguard the interest of consumers and the environment
Now that Delhi government has banned street slaughter, Ministry of Food Processing Industries has included frozen and chilled chicken under Meat Food Products Order (MFPO) wing and Delhi Agricultural Marketing Board (DAMB) plans to set up a state of the art poultry processing plant for Delhi, there are more things that need to be done to safe guard the interests of consumers.
In an interesting move recently Ireland’s Department of Agriculture has banned disposal of food waste including raw meat, fish and poultry waste in sanitary land fills. As per the new law the food businesses must ensure that they have the necessary procedures in place to dispose the material correctly by rendering. The E.U. Animal By-products Regulation sets rules to safeguard public and animal health by ensuring the safe handling and disposal of animal by-products not intended for human consumption.
By-products include raw meat, raw fish, and former foods of animal origin when they are no longer intended for human consumption from retailers, distributors, wholesalers, and food manufacturers. Catering waste, defined as waste from restaurants and kitchens, including central and household kitchens, is not included in this definition.
In the explanatory notes it is mentioned that in order to safeguard public and animal health, waste raw meat, fish, and poultry must be kept separate from other general waste by having separate containers for the storage of the two types of waste. If they are not kept separate they must all be dealt with as raw animal by-products and cannot be land filled.
Currently in India, most of the wastes from municipals slaughter facilities (large and small animals) and from shops doing poultry slaughter is picked by municipal trucks or packed in bags and is disposed of at the city land fills, which are the breeding ground of diseases. Though it is the responsibility of the municipal corporations to dispose of this waste properly, it is seldom done.
Another law that takes effect in EU from Jan 01, 2006 is the ban on use of antibiotics as growth promoters. This is the final step to tackle the emergence of bacteria and other microbes resistant to antibiotics, due to their overexploitation or misuse.
As per the commission, it is a necessity considering public health and will effectively address the problem of micro-organisms becoming resistant to treatments that the population has relied on for years. Animal feed is the first step in the food chain, and so a good place to start. Antibiotics can now be used only for veterinary purposes.
In India there is currently no law which mandates a withdrawal period for feed containing antibiotics before the birds (chicken) is sent to the market or to the processing plants.
By adopting good management practises and proper bio-security it will be possible to tackle some of the emerging problems and other can be tackled by proper vaccination and antibiotics can used when ever required. But in order to safeguard the rights of consumers and also human and animal health, it will be necessary to enact laws as above.
May the New Year bring more opportunities knocking on your doors and may success & happiness be yours.
Wishing you a very happy and a prosperous new year 2006 !!
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
December 31, 2005
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