Maize Prices decline – but are still higher; WASDE Report projects high corn production and high exports

Maize Prices decline – but are still higher

As the corn from the go-downs of Food Corporation India has started to trickle in the market, the average prices in the market yard have declined from 7400 to 6495, almost 12.2% in last one week and reached mid August 2006 levels. But averages can be deceptive. The corn release was announced in Andhra Pradesh (118,900 tons), Tamil Nadu (96,500 tons), Maharashtra (45,000 tons), Karnataka, Orissa, Kerala, Madhya Pradesh, Gujarat and Goa (89600 tons collectively). The prices are still high in Uttar Pradesh (Rs.6580), Maharashtra (Rs.7520), Bihar (Rs.6500), Gujarat (Rs.7425), Rajasthan (Rs.7600).

Reports from Bihar indicate extensive damage to stored corn due to improper storage. Wet, high moisture grain in gunny bags is liable to get heated, germinate and spoil and can be the major source of Aflatoxin, which can cause havoc in the poultry and starch sectors alike.

There are reports from Maharashtra that new corn has started to arrive is some markets, but prices are ranging from Rs.6900 to Rs.7400 per ton delivered.

Arrivals of Bajra (pearl Millet) have started in states of Gujarat, Haryana, Karnataka and Rajasthan and the prices have started to come down. Average price in the market is Rs.6402 per MT, lower by 6.6% than last week. But the prices are also lower than corn by 1.2%. The prices are higher than last year by 7.2%

Sorghum (Jowar) prices are also down to Rs.7780 per MT at the market yard, and are lower than last week by 5.2%. The prices are similar to last year, but are higher than corn prices by approximately 19.7%.

Barley prices have remained stable and are at Rs.7860 per MT and are higher than last year by about 3%.

Prices in CBOT settled at $95.10 per MT. FOB price, US Gulf were at $120 - $123 from Sept – Dec deliveries. Reports indicate that the freight rates are high and would continue to be move up, till they find resistance.

WASDE Report projects high corn production and high exports

Tha latest World Agricultural Supply and Demand Estimates (WASDE) report out on Sept 12, 2006, project US corn production at 279.4 MMT, almost 3.5 MMT highr than the last month’s estimate. His would the the second largest corn crop in US history. With china out of the market and US being the only residual supplier of corn in the world, report projects that exports of corn to be about 57.15 MMT, about 2.5 MMT higher than the august estimate. As per FAS report, US would dominate the market with 71% market share in trade, while Argentina would share 14% of the world market.

China though is expected to produce a bumper crop, may just have 5% share in the world market, due to its continuous high dometic demand for the livestock and poultry sectors which are experiencing rapid growth and industrial use. A high meat consumption is largely attributed to higher incomes and urbanization. In Brazil, a similar strong domestic growth is projected to limit exports. Argentine crop would be available for exports only in March 2007.

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

Sept 15, 2006