Imports of agri commodities – A big question
Another tender of 0.4 MMT of wheat was announced on Thursday, July 27, 2006. With this tender the total imports of wheat into India will be close to 3.9 MMT at zero percent duty. There has been confusion on duty on imports by private players and traders, which at one time was announced as zero percent, but later increased to 5 percent.
Price analysis in early July 2006 indicated that it is not only the food grain (wheat) which is in short supply, but also the coarse cereals and pulses are in short supply and thus the duty on imports of pulses was slashed.
The situation is somewhat similar for Maize as well and the price to the end user is about Rs.7200 – Rs.7300 per MT, about 35% higher that the Minimum Support Price (MSP) announced by GOI. The steep price is making it difficult for the poultry farmers and starch manufacturers to use more maize.
Looking at the prices at the market yard, the average price for maize is Rs.6233 ($135.5) per MT. Other grains like Sorghum (Rs.7263 per MT), and Bajra (Rs.6431 per MT) and still higher and can not be used in poultry feed.
GOI has decided to release maize from the FCI go-downs. Reports indicate that 0.45 MMT of maize will be released into the market by open tender and another 0.1 MMT will be at the discretion of the State Director of Animal Husbandry, for which the price to the end users has been fixed at Rs.5500 and the difference between the market value and the fixed value will be covered by the Department of Animal Husbandry. The 0.1 MMT has been earmarked as 50,000 tons for Andhra Pradesh and 25,000 tons each for Tamil Nadu and Maharashtra. Stocks for Maharashtra will be released from Karnataka, while that for Andhra Pradesh and Tamil Nadu will be released from Andhra Pradesh. The condition of the stock is still to be examined and it will be some time before these stocks area available. Based on the numbers the average requirement for India for maize is over 1.1 MMT and the FCI maize will cover only 50% of the months requirement.
CBOT this week closed for Sept delivery at $2.372 per bushel ($93.36 per MT) and for Dec delivery $2.534 per bushel ($99.73 per MT),which is same as last week’s close.
The ocean freight rates are expected to jump due to the increase in the crude oil prices and additional fuel surcharges being levied. As per Mr.Ken Eriksen, vice president-transportation, Informa Econmics, who spoke at the U.S. Grains Council’s 46th Board of Delegates’ Meeting, the US domestic freight traffic will increase 67 percent and general cargo 113 percent. Barges are the most fuel-efficient transportation method and will remain so, followed by rail and then truck. But as many barges are due to be retired soon, higher demand for barges is likley to increase the prices.
He also pointed out that that ocean freight is a rising wave with larger and larger ships coming on line, including a 96,000 TEU (20 feet equivalent units) containership.
How to feed the growing population?
The populations is two most populous countries, China and India are incearsing fast and India is likley to take over China and become the most populous country by 2025. By 2050 the world population is going to increase to 8.5 – 9.6 billion and most of this population increase is going to come from Asia, which has only 30% of arable land. There are only two ways to feed the increasing population, either increase the productivity from the current land or import.
Along with the population increase, the affluence of the people is also increasng and food is the first change people tend to make as their income increases. This allows them to move from grains and oils to meat, milk and eggs which not only help improve their diets
China and India have started a move towrads imports, China with import of corn to feed the increased animal populations and India with wheat to feed its growing human population.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
Jul 29, 2006
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