Maize prices tumble in India and The Chinese Corn Story

Maize Prices tumble this week

Maize prices in India came down on higher arrivals and lower buying in the major pockets. Average prices ranged between Rs.,.7200 - 7300 per MT at the market yard, down from last weeks Rs.7500 - 7600 per MT range, a loss of 3.6% over last week. The prices however are higher than last year during the same period by almost 25%. This lowering of prices is a short lived phenomenon as per the market experts as the prices will eventually go up as the Rabi harvest is over and the maize arrival dry up.

Pearl Millet (Bajra) prices were down by 2.3% over last week at the market yard to Rs.7000 per MT. The prices are similar to last year prices and are lower than maize this year by just 3.6%.

Sorghum (Jowar) prices have also shown a decline in the market by 4.4% this week to Rs.8700 - 8800 per MT. The prices are higher than last year by 17% and also higher them maize by 20%.

Barley prices remained same as last week at Rs.7100 - 7200 per MT at the market yard, but are higher than last year by 3.2%. Increased demand and slow arrivals are keeping the prices up this year.

The prices of corn on CBOT balanced this week, with some up and some downs this week. CBOT prices were May $143.27, down from $141.92 last week; July 147.07, up from last week $146.45; Sept $145.02, down from last week’s $145.86’ Dec $144.63, down from last week’s $147.33.

There is scope of import of corn at an appreciated rupee (a nine year high) and a weak dollar, but as the domestic prices in India rally as they are, it will be tough decision to take by any importer.

While there are analysts who believe US can produce the largest ever corn crop, there are analysts who reason that it will be difficult to produce more corn in US. Believers insist that the corn crop in US would be close to 320 MMT, which will match the demand and overall the supplies will be tighter. For a large US crop weather plays essential role and the plantings must be done as early as possible. A wet cold April this year has delayed plantings in the corn belt in US and if this continues, farmers just might switch to Soybean.

World grain supplies are on the decline in the year 2007/08. Problems with a wheat crop in US due to severe cold weather and also problems in Ukraine and Russia are likely to take effect and show up as an increase in world prices on wheat. India is likely to be in the market again to purchase wheat from the global market, despite a higher crop estimate, adding to the ever growing global demand.

The consumption is growing much faster than the production all over the globe. Unless countries act and adopt new technologies, like biotech which can withstand vagaries of weather, it just might be difficult to catch the demand.

The Chinese Corn Story

Reports from chines agencies indicate that the 2007 corn crop is likely to be higher as the area under corn will be up by almost 3.6%. In 2006 China produced 144 MMT and the production is likely to increase to 150 MT by 2010. As the production increases in China, the consumption is also projected to increase. In 2007 the requirement of corn is expected to be 101 MMT against 98 MMT in 2006, while the corn use in industrial sector (starch and ethanol) is likely to increase to 38 MMT from 36 MMT. China is projected to offer only 2 MMT of corn to the world market in 2007-2008 as per the report.

China has recently issues the second amount of export quota of 1 MMT, which must be finished by Feb 2008. Deals must be signed by June 2007, or the quota will lapse.

Price of corn in China is up as per the latest reports available. The prices are ranging from $168 to $ 207 per MT depending on the production or consumption area. Exports have been offered a price of $200 - 210 FOB. Other reports indicate that the prices are lower at $185 - 190 per MT.

While China, is a net importer of soybean, it will also be a net importer of corn soon and may import about 25 MMT of corn by 2020, as per a report. The self sufficiency ratio of China's corn supply in the year 2000 was 97.4% and is likely to drop to 74% by 2020. One of the reasons in the spurt in demand of corn in China is the increase in demand from the corn processing sector, which has propelled domestic corn prices to a 10 year high.

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

Maize prices in India and highest corn production estimates for US

Maize prices move up in India

Maize prices in the Indian market moved up steadily. At the start of the month the prices at the market yard averaged Rs.7100 per MT, and 2 weeks down the line the prices moved up to Rs.7500 per MT, an increase of 5.6% over a two week period. The prices have risen across the board and even in Andhra Pradesh, Tamil Nadu where new crop is being harvested. In Rajasthan and Gujarat the prices at the market yard touched Rs.8600 per MT at the market yard. Delivered prices in India are ranging from Rs.8600 - 9650 depending on area of delivery.




The prices at CBOT softened quite a bit this week. May prices on April 20 were down at $141.92 from $145 on April 13, while July prices were $146.45 & $150.19 for the same dates.








FOB values corn (US gulf) were down for May delivery to $ 154.90, June delivery was down to $158.25. The average FOB values ranged from $155 - 160 per MT.

With the Indian Rupee appreciating against the dollar (Rs.45 to Rs.42.5), it just might be feasible to import corn and bring that gap between supply & demand. As the prices move up and supplies dwindle, the prices will certainly go up.


Corn harvest in South Africa is expected to be 6.40 MMT, slighltly higher than earlier estimates, while in Argentina the production is estimated at 22 MMT by the Government. By last week the harvest was about 30% complete and if any wet weather does not come in, the harvest will go as per the scehedule.

Highest Ever Corn Production Estimated in US

Profarmer, a US consulting company based on certain scenrios has projected a highest ever corn crop in the US in 2007/08. The three scenarios presented at Best (B), Medium (M) and Worst (W), project the production to be at 343 MMT at the highest and 297 MMT at the worst point.

The total domestic corn usage is expected to move to 260 - 263 MMT in 2007/08, up from 238 MMT in 2006/07, with the major share comming from Ethanol production, up from 54 MMT in 2006/07.

While certain people do admit that the area under corn in the US will be the higest at 90.45 million acres, the productivity will be subject of debate due to the prevailing weather conditions and the pace of planting. The last report available put the planting at 4%, against 8% done in 2006/07 during the same period.

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

Maize prices stable, others up

Maize prices stable, other commodities move up

Maize prices remained stable this week in India at Rs.7200 – 7300 per MT at the market yard. The prices though were about 26.5% higher than prices last year (Rs.5600 – 5700 per MT) at the market yard. This prices increase is attributed by higher demand for poultry, starch and other uses, but also the inclusion of more maize in the diets of subsistence farmers who may not be in a position to purchase wheat, rice, pulses or other food grains and depend solely on maize in their diets.

The graph shows how the maize prices at the market yeard have risen from April 06 - Mar 07 (kne year period) and the changes on a month to month basis. The prices are based on averages of the prices at the market yard.

Pearl Millet (Bajra) prices rose by almost 13.6% over last week, reaching Rs.7250 – 7300 per MT range at the market yard. The prices area lso higher than last year by 7.5%. Price differential between maize and pearl millet prices is 0.9% (positive), which means the prices of pearl millet are higher than maize.

Sorghum (Jowar) prices also rose by 7.4% over last week reaching Rs.7950-8000 per MT range at the market yard. The pries are higher than last year by 24.2% and the price differential between Sorghum and maize prices is 24.3%.

Though there will be layer farmers who will be able to use pearl millet in their rations even though prices are a little higher or at par, but the broiler farmers will not be able to replace any maize in the rations.

Barley prices also rose this week by 1.2% over last week to Rs.7850 – 7900 per MT range. The prices are higher than last year by 25.5%. Though India is not the largest beer consuming country, the consumption is slated to grow at 15% in the year 2007/08 as per the analysis done by the Beer Manufacturers Association. The total consumption of beer was 135 million cases in 2006/07 and is expected to be 155 million cases in 2007/08. New companies are entering into the market with new products and brands.

Prices of maize in US are stabilizing and the CBOT closed on April 5, 2007 for April delivery at $144 per MT, the FOB value (US Gulf) is indicated at $153.95 per MT. The CBOT values are not as low as on Mar 3 – Apr 3, but are still lower in comparison to last week. FOB values (US Gulf) are also lower than last week May $157.10; June $159.85; July $161.80.

Freight costs are going up and defy all logic, but delays have been reported in Australia, China and also India, keeping the ships tied up in the increasing demand. As India comes into the market again to purchase wheat from the global market, the freight rates might go up again.

It is expected that the maize prices in US will remain strong, due to high demand for ethanol, and even at such a high crop expectation (317 MMT). But this is only a starting point and based on planting intentions of the farmers, there could be some swings, but not large. The production is subject to weather conditions prevailing at the time of sowing, flowering, maturity and harvest. Next week farmers in US will start the planting process and we will see the same in India as well.

Best Regards
Amit Sachdev
Representative
U S Grains Council
bluecross303@gmail.com