Corn prices stabilize; Recommendation from USGC Poultry Marketing Seminar

Corn prices stabilize

The average corn prices in the market yard across the country stabilized at Rs.6000 per ton, but the prices are higher than last year by 4.2% at the market yard. The average delivered price is about Rs.7200 per MT. In Punjab even with the new crop the price is about Rs.7300 per MT delivered, while in parts of Andhra Pradesh prices are at Rs.6300 – Rs.6500 per MT delivered.

Pearl Millet (Bajra), prices have come down from last week’s price of Rs.6700 per MT to Rs.6200 per MT this week, drop of 7.5%, but the prices are higher than last year’s value by 2.4%. In comparison to corn, the prices are still higher by 3.8%.

Sorghum (Jowar) prices have also come down from Rs.7100 per MT to Rs.6800 – Rs.6900 per MT range, drop of 2.8% at the market yard. The prices are also much lower than last years price of Rs.7800 at this time of the year. As against corn, the pieces are higher than corn by 14.3%, making it impossible for its use in poultry ration as replacing corn.

Barley prices have risen this week to Rs.7500 – Rs.7600 per MT range. Delivered prices are ranging from Rs.8300 – Rs.8500 per MT. As per reports available the prices are likely to remain high and small quantities are coming into the market and the trade anticipates a shortage of crop.

The price of corn in US has climbed yet again and CBOT closed at $123.75 per MT for Dec delivery. A year ago, second week of Oct 2005, the a ton of corn at CBOT traded at $80.2 per MT, a month back (Sept 2006) the price was $95.1 per MT.

As per the latest WASDE report, released on Oct 12, 2006, the world production of corn in 2006-07 is expected to be 689.14 MMT, down from 2005-06 estimated production of 692.74 MMT. The production in US is expected to be down to 277 MMT and the total harvested acres are also expected to be down to 71 Million acres. The average productivity is 3.90 tons/acre.

Production and export surplus in other countries is as under, Argentina, 17.5 MMT, with an exportable surplus of 11.5 MMT, Brazil, 40.5 MMT with an exportable surplus of 1.5 MMT and China, 141 MMT with an exportable surplus of 4.0 MMT.

The 2006/07, marketing year average price is raised to $2.40 to $2.80 per bushel ($94.46 – 110.21 per MT), reflecting the tight stocks and higher demand.

Recommendation from USGC Poultry Marketing Seminar

While on a visit to India Dr.James Denton and Dr.John Marcy in Sept 2006, apart for conducting seminars and one to one meetings with the poultry processors, also carried out a bench marking exercise of the chicken and chicken products being sold in India. Some of the critical observations and recommendations made by them are listed below.

Observations

1. Indian poultry processors demonstrated a wide array of products with marketing and packaging systems ranging from excellent (one processor) to very poor dependent on brand. The retail markets also demonstrated a wide array of product display locations and formats, also ranging from excellent to very poor. This lack of shelf space and priority display location was evident every where.

2. Cold chain management is a serious concern with distribution not controlled by the processor. This includes mismanagement of product by the retailer.

3. There is a lack of relationship between poultry processors and the retailer with regard to product display location and inventory management & between the retailer and the Indian consumers with regard to communication and consumer feedback.

4. The lack of a government inspection system (covering only frozen chicken) also results in a lower acceptance of mechanically processed chicken.

Recommendations

1. The government of India must develop a single poultry inspection system to assure that safe and wholesome product is provided to the Indian consumer. A proper inspection system, wherein all chicken products (chilled or frozen) are covered and receive a certification from the federal inspector would be trusted by the consumer. Random checks on plant through third party testing can be mandated.

2. Industry needs to work together on formulating standards which can be used by the trade organizations and provided to its members.

3. Poultry processors need to develop mechanisms to interface directly with consumers of poultry products. The absolute minimum should be a toll free 800-number placed on every package of product offered in the retail market. This will enable the processor to hear directly from the consumer and not through the filter of a retailer.

4. Individual poultry processors must develop improved relationships with retail market management personnel. One of the key factors which needs improvement is product placement in the retail store in priority locations rather than in obscure locations.

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

Oct 14, 2006