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
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