Maize Prices are high, but stable
Corn prices have remained stable for 2 weeks now, with delivered prices close to Rs.8000 – 8200 per MT range average. In some areas delivered prices are as high as Rs.9000 per MT. The prices are higher than last year by 15% over last year at this time of the year. There has been speculation in the market and reports suggested that GOI will ban exports of maize from India, but this has not happened. The end users are keenly watching the situation and hoping for a relief from the Government by way of ban on exports on a short term.
Pearl Millet (Bajra) prices from the first week of Nov 2006 have increased from Rs.6600 per MT to Rs.7950 per MT at the market yard, an increase of 20.4%. The prices are also higher than maize (at market yard) by 20%. Under normal circumstances the prices of pearl millet during the harvest would be lower than maize, but not this time. In the last 2 months, it has been only one week (last week of Oct 2006), when the price of Pearl Millet was lower than maize.
Prices of Sorghum on the other size has been showing a downward trend, which average prices currently at Rs.7600 per MT at the Market Yard. The prices are still higher that the maize prices at the market yard by 16%%.
Barley prices have shown the highest increase in these last two weeks and have increased to Rs.8000 per MT from Rs.6900 per MT at the market yard, an increase of 16%. Last week the prices were at a high of Rs.8600 per MT at the market yard. The prices during the last year were at the range of Rs.8600 per Mt level at the market yard.
Before the Thanksgiving Holiday, the CBOT closed higher at $142.72 [per MT) for Dec delivery. The March 2007 delivery was higher at $148.86 per MT. After the holiday the market closed higher with Dec delivery at $145.32 per MT and March delivery at $152 per MT. This is unprecedented increase.
Tighter grain supplies, high prices forecast for 2006-07
The International Grain Council (IGC), has forecast a wheat production of 587 MMT in 2006-07, lower by almost 31 MMT over 2005-06. The Corn production is forecast at 688 MMT, down by almost 5 MMT over 2005-06. The consumption of corn as per IGC is expected to be 721 MMT, higher than 2005-06 estimates of 700 MMT.
IGC also reports that the corn carry over stocks in US in 2006-07 are expected to be 23.8 MMT, which is less than half from last year’s 50.1 MMT.
This is the second year in the row that the world grain production will be lower, while consumption will be up, signalling tighter supplies and higher prices for 2006-07.
Chinese government has finally confirmed that they have issued export permits for 4 MMT of corn from Nov 2006 to Feb 2007, but there have been reports that the 1 MMT corn export slated for Nov – DEC 2006 is delayed. Speculation on exports from China, have also increased the local prices in China. In Argentina, the permits for new crop export registrations are on hold, as the government audits the registrations and wishes to introduce a higher export tax.
Increased cost of production of eggs and broilers – effects profits of farmers
As the delivered price of maize have increased to levels beyond Rs.9000.00 per MT, the price of feed which constitutes 55 – 60 percent maize, have also gone up, thus signalling the increase in cost of production of eggs and broilers.
When maize was delivered to the feed mills and farms at Rs.6000 per MT, the feed prices were in the range Rs.9000-9500 per MT and the cost of production of live broilers ranged from Rs.25 per kg in South India to Rs.29 per kg in North India.
With the price of maize at Rs.9000 – 9300 per MT at several locations, the feed prices have reached Rs.13000 – 13500 per MT, and the cost of production of live broilers is up to Rs.33 per kg in South and Rs.38 in North India. The market prices though have not gone up so much, thus effecting the profit margins of the farmers.
The cost of production of eggs which used to be average at Rs.1.11 each at times when price of maize was Rs.6000 per MT, has now gone up to Rs.1.41 each at these times.
While some state governments like Maharashtra have increased the sale price of milk by Rs.1.00 per kg (to the consumer) due to increase is price of feed, it is not possible to increase the price of broiler. Egg prices in the markets have shown an increase.
Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com
Nov 25, 2006
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