Commodity Prices slide up; Avian Flu effects poultry trade

Commodity Prices slide up

The average maize prices softened a bit and the demand fell due to the bird flu. The average price for March 2006 $130.2, which this week fell by about $4 to $126.3 per MT at the market yard.

Another reason for the drop in prices is the arrivals in Bihar and Tamil Nadu. Prices in Bihar till last week were at $137 per MT, slid to $118 per MT at the market yard on fresh arrivals. Prices in Madhya Pradesh and Uttar Pradesh have gone up a little bit from $125 and $ 153 to $133 and $158 per MT respectively.

Pearl millet prices till last week were at $143 per Mt at the market yard, have notched up further to $150 per MT. Last year same time the Pearl Millet prices were $134 per MT. The prices are higher by almost 12% than last year.

Sorghum prices have remained stable at $160 per MT at the market yard, but the prices last year during the same time were $141 per MT, indicating an increase of approximately 13.5% over last year prices.

Barley crop has started to come into the market, but the average price at the market yard is about $139 per MT, which last year was $123 per MT, an increase of about 13%.

The dip in corn prices is a temporary phenomenon and as the chick placement catches up the demand for corn will be higher and the prices might shoot up much faster.

Reports indicate that the planting in US are down by almost 5% than last year. While the industry estimated the plantings to take place in over 80 million acres of land, preliminary information available indicates plantings in only 78 million acres of land.

With the world corn demand higher and also domestic requirements up in US particularly due to ethanol, the prices in the world market are likely to remain high. Some analysts also believe that the US farmers are likely to make more money in 2006-07 and the average farm price will be up from $76.75 per MT to $84.62 per MT.

Corn on CBOT for May delivery closed at $95.64 per MT, higher by almost $2.73 per MT than last week, basically on the news that the supplies will be short and the demand will be higher.

Avian Flu effects poultry trade

With almost 45 countries affected due to bird flu in four regions of the world, including Europe, Africa, Asia and Middle East the disease has killed about 108 people in the last 3 years. It has caused culling or death of 200 million birds in the region, but vigorous response to outbreaks in this certain regions, particularly in Thailand, Vietnam, China and India have reduced the chances of transmission of the disease from poultry to humans.

Vaccination campaigns, such as the one carried out in Vietnam, have also played an important role in helping some countries contain the spread of the disease

The FAO, in close collaboration with the World Organization for Animal Health (OIE), has urged governments to concentrate containment efforts on the farm and emphasizes the role of human activity — trade and markets — which are the main spreaders of the virus but also are the areas that can be inspected, controlled and improved.

The disease is threatening the livelihoods of many people and depressing poultry prices in many regions of the world. The recent outbreaks in Europe, the Middle East, Africa and India have caused dramatic swings in poultry consumption and sharp price declines.

Some reports indicate that the international poultry prices over the last few years were higher by over 30% because of declining exportable supplies. But the developments in early 2006 created a completely different market environment, wherein consumption shocks are progressively lowering global import demand for broiler meat. Poultry prices are expected to continue declining in the world market, threatening industry profitability around the world, household livelihood and rural employment opportunities in all developing countries.

The unfounded fears of disease transmission have reduced consumption, effected general trade including imports and exports. If the domestic prices remain depressed, lower production growth is forecast.

In India reports of consumption drops of 25 - 30% have caused domestic prices to fall by over 50% in some area, implying lower production prospects for some time to come. In India the prices declined to Rs.1 per kg live in some markets. The consumption in some markets is showing an upward trend, but stocks are still selling below cost of production.

In Brazil too, where exports account for approximately 30% of total poultry output, the price of day-old chicks is down sharply, a warning of potential production changes.

Ultimately it is the consumer, who needs to be convinced that the product that is being put forward is safe and the companies in the business and governments are going all the way to ensure that the products are safe to consume. The message that as long as poultry products are cooked properly and come from a reliable source then there is nothing to worry about must be highlighted. Effective strategies will need to implemented, live bird markets regulated and slowly and gradually banned as has been done in Hong Kong, Vietnam and Thailand.

Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com

April 07, 2006