Commodity prices are stable; China and Food Safety

Commodity prices remain stable

Average maize prices in India slumped by 3% over last week, reaching Rs.7200 per MT at the market yard. The prices are just about 3.7% higher over last year prices at the same time. During this time last year prices had risen sharply. Though one reason for the lower and stable maize prices is an anticipation of higher maize crop from increased area under the crop.

Pearl Millet (Bajra) prices were up by about 2.3% over last week reaching Rs.6800 per MT at the market yard and are about 3.6% higher than last year prices. The Pearl Millet prices are also lower than maize by 6%. At some places like Maharashtra, Bajra prices are much higher than maize prices though.

Sorghum (Jowar) prices this week also slumped by 4.4%, and were Rs.9200 per MT at the market yard. The prices on an average remained higher than maize by 34%. The prices on an average are higher than maize by 28%.

Barley prices at the market yard also surged by about 3.7% over last week and reached Rs.8100 per MT. The prices are higher than last year by 11.4%.

Corn prices on CBOT were higher than last week and Sept and Dec deliveries closed at $134.40 and $141.17 per MT. Last week the closing was $131.09 and $137.94 respectively. Last week the FOB, US Gulf price for corn was close to $160 per MT for Aug/Sept deliveries.

China and Food Safety

While much has been said about China and its food safety record, the Government of China is going ahead to make a clean sweep and has launched a four month campaign to improve its food safety record. With just one year let for the 2008 Olympics, the government has planned a monitoring system, enhanced inspections and also set up a recall system. The white paper in this regard can found on the link below.

http://www.china.org.cn/english/news/221274.htm

The new system calls for an integrated approach to to monitor the quality of product design, raw materials, processing, sales and service. This will help in improving consumer confidence in the safety of its food and other products.

Amit Sachdev

India Representative

U S Grains Council

bluecross303@gmail.com

Commodity Prices Dip; GM food crop trials get a nod in India

Commodity prices dip

Maize prices declined to Rs.7400 - 7500 per MT levels at the market yard on an average in India, translating to a delivered price of Rs.8500 ($208) per MT at the max. The prices are about 1.5% lower than last week. There are no major buys at this point ans most of the end users are covered. But the prices are still higher than last year by 12.5%. At the start of the sowing season (July 2007), the prices were higher than last year by about 18%, while in June 2007, the prices were higher than June 2006 by 21%, which did stimulate the farmers to bring more area under maize in some parts of the country. As per the reports available from Ministry of Agriculture, 7.149 Million Hac of land is under under maize in 2007, against 6.776 Million Hac in 2006. Under normal circumstanses the land under maize is close to 6.4 Million hac. In 2006, as per the Department of Statistics, Ministry of Agriculture, Maize production was 14.98 MMT (11.43 MMT in Khariff - harvested in Oct & 3.55 MMT in Rabi - harvested in Feb/Mar). As the total land is higher by 5.55%, and there has been a better monsoon, the market is expecting a better crop, an additional 10%, which would mean close to 12.6 MMT in Khariff alone.

Pearl Millet (Bajra) prices also slid down on higher supplies in the markets Rajashtan, where the commodity was traded at Rs.6200 per MT. The avearge price is Rs.6600 per MT. The price is 7.6% lower than last year and also 11% lower than maize. The total area under Pearl Millet also gone up to 7.706 Millon Hac in 2007 against 7.270 Million hac in 2006, an increase of 6%. Under normal circumstances the land under Pearl Millet is about 9.17 Million hac.

Sorghum (Jowar) prices were up to Rs.9600 per MT at the market yard, adding 5% over last year. The prices are about 36% higher than last year and 30% higher than maize prices. Area under Sorghum has dropped to 3.156 Million Hac in 2007 from 3.356 Million Hac in 2006, a drop of 6%. Under nornal circumstances, the land under Sorghum is about 4.20 million hac. Lower land coverage is still goingto increase the prices further for the commodity.

Barley prices also moved up by 2.5% over last week, reaching Rs.7780 per MT. The prices are similar to last year prices.

Prices of corn on CBOT dipped for Sept and Dec deliveries to $129.28 and $136.05 per MT.

GM food crop trials get a a nod in India

The Genetic Engineering Advisory Committee (GEAC) gave clearance for the large scale field trails for the first food crop, Bt Brinjal (Egg Plant). The trials will be held at Indian Institute of Vegetable Research, Varanasi. Untill recently only one GM crop, GM cotton is cleared for growing in India, but this being a commericial crop not intended as a direct food has found acceptance with the farmers all over the country.

Bt Brinjal is also expected to generate a similar acceptance, as the vegetable in grown in almost 0.5 million hac of land yileding 8.5 million tons of the vegetable. The farmers need to spray pesticides at least 2 times before each picking to kill the worms. The inclusion of the Bt gene will help reducing the number of spays, which will reduce the cost of production, will be beneficial for the farmers, environment as well as the consumers. The incorporation of the gene will provide inbuilt resistanceto the plant against the insects.

Though the trials are likley to start this year, the commercial crop may not be available untill late 2009.

Amit Sachdev

India Representative

U S Grains Council

E Mail: bluecross303@gmail.com

Commodity prices stable; Biotech or not; Layer sector to grow faster in India

Commodity prices stable

Maize prices in India remained stable at Rs.7500 per MT at the market yard this week, but the prices were higher by about 19% over last year. With rains in most parts of the maize growing areas, there are reports of crop loss by submergence, delayed sowing etc and it is too early to predict the 2007/08 maize crop.

Pearl Millet (Bajra) prices moved up by about 2.7% this week to Rs.6800 per MT at the market yard. The prices are about 13% higher than last year prices. As against maize the prices are 9.5% lower than maize.

Sorghum prices dipped at the market yard this week by 4.6% over last week, to reach Rs.9200 per MT. The prices are about 24% higher than last year. As against maize the prices of Sorghum are 22% higher.

Barley prices have remained stable this week to Rs.7500 - 7600 per MT at the market yard, but the prices are higher than last year by 10.5%. As per the latest USDA production numbers, India's barley production is likely to rise due to more land under the crop.
Barley is used mainly as a cattle feed and by the brewery industry, but more recently has found use in the food especially breakfast cereals, due to health benefits offered by barley.

The latest report from USDA on corn crop, released on Aug 10, 2007 estimates the maize (corn) production to be 332 MMT, up by 24% from 2006, while U.S. soybean production is estimated to be sown by 18%. USDA also estimates that the ending stocks for 2007/08 will be up to 38.50 MMT.

Corn prices on CBOT were slightly up (+$2.59) over last week to $131.09 per MT (Sept Delivery). Prices for Dec also were up by $2.94 to $137.94 per MT.

Biotech or not

Many studies have been conduced which indicate that the biotech feed products are as safe as the products made available through conventional breeding. In the most recent report analyzing 19 separate studies, European Food Safety Authority (EFSA), has concluded that “Animals that have eaten biotech feed show no residual traces in their eggs or meat”.

The statement was against the petition filled by an International Environment Group, demanding special labels for dairy and meat products derived from those animals which have eaten biotech feeds.

The report said, “To date, a large number of experimental studies with livestock have shown that recombinant DNA fragments or proteins derived from GM plants have not been detected in tissues, fluids or edible products of farm animals like broilers, cattle, pigs or quails,”

Another interesting study has been conducted by Northern Ireland Grain Trade Association (NIGTA), on the cost of feed, if biotech is not approved by EU. The study indicates that the feed costs in EU will increase by 25% by 2009, rendering food production uncompetitive, if biotech varieties are not approved.

Layers sector to grow faster in India

Estimates by some of the leading players in the industry indicate that the layer sector in India has found a foothold, specially in the southern India. The layers industry from 2007/08 onwards is likely to grow by 7% as against a 4% growth until last year 2006/07. One of the main reasons of this growth is the stable egg prices and higher demand of eggs in the country.
As per current estimates India will place 175 Million layers in 2007/08 producing 48.8 billion eggs and if the growth of 7% is maintained, the numbers are likely to increase to 213 million by 2010/11, producing 59.8 billion eggs.

There is an increased demand of eggs for export as well from Middle East and East African countries. Cost of production of egg is the cheapest in India at Rs.1.40 per egg ($0.40 per doz) and even with small hitches like bird flu in the North East India, exports would continue if zoning of birds is practiced.

Amit Sachdev

India Representative

U S Grains Council

E mail: bluecross303@gmail.com

Prices of all coarse grains move up, Corn – fuel v/s food

Prices of all coarse grains move up

Prices of all coarse cereals were up this week. The deliveries were slow as many areas of the country experienced extensive rain.

Corn prices were up by about 1% over last week to Rs.7500 per MT at the market yard. The prices are about 21% higher than last year. Prices in Bihar were up to Rs.7200 per MT, but as the state is affected by floods (almost 9 million people are affected and major portion of land is submerged in water), it is very difficult to get stocks out of Bihar. Prices in Gujarat and Rajasthan touched Rs.9800 and Rs.8500 per MT respectively. Even in Tamil nadu, the hub of activity. The prices are close to Rs.7200 – 7300 per MT at the market yard. The latest numbers indicate that the ares under maize in India has increased from 6.155 Mill hac in 2006 to 6.687 mill hac in 2007, an increase of 8.64%. How is translates to higher production is yet to be seen.

Pearl Millet (bajra), prices were up by 1.6% over last week to Rs.6700 per MT at the market yard. The prices are 3.79% higher than last year. The prices are also 12% lower than maize, making it a good substitute against maize. As the prices of eggs have fallen all across the country due to the bird flu confirmation in the country and banning of exports, there is likely-hood that many farmers will try to use Bajra in feed to reduce the cost of production. The total area under Peal Millet as per reports has increased by 12.43% to 7.47 mill hac in 2006 fro, 6.644 mill hac in 2006, which is a substantial increase.

Sorghum (Jowar) prices are up by 6% over last week to Rs.9650 per MT. The prices are 34% higher than last year and about 28% higher than maize. The highest prices were in Maharashtra at Rs.11500 per MT at the market yard. The land under Sorghum has come down by 4.27% as per the latest reports to 3.023 mill hac in 2007 as against 3.158 mill hac in 2006.

Barley prices were reported to be 3.3% higher than last week, reaching a level by Rs.7600 per MT. The prices are also higher than 8.3% over last year.

Corn on CBOT closed at $128.5 – 135.03 for Sept – Dec delivery. This would translate to $145 – 152 per MT FOB, US Gulf, slightly higher than last weeks close. It is getting more and more difficult to estimate the CNF values as the freight costs are so un-predictable. The Baltic Exchange Dry Index, which is managed by Baltic Exchange, London, covers dry bulk shipments, like grain and this has crossed the 7,000 points mark for the first time this week, more than doubling from 3,450 points a year ago.

The Over the last year, the freight costs have almost doubled. Reports suggest that the ocean freight costs for U.S. Gulf-China route have risen by around $35/ton since the beginning of the year, and is currently at $100/ton. One of the main reasons for this increase is being attributed to port congestion in Australia and Brazil, besides increased freightage engaged in hauling coal and iron ore to China.

Corn – fuel v/s food

New estimates posted by private analysts suggest the corn production in US to be 321 MMT (FC Stone) to 332 MMT (Proforma), with the productivity at 3.76 – 3.89 tons/acre. USDA estimated the production at 326 MMT, with an average productivity at 3.81 tons/acre. In 2006, US produced 267.58 MMT, with an average productivity of 3.79 tons / acre.

There is a debate going on that the shift in corn usage from food to fuel will disturb the very economics of livestock farming. Such may not be the case.

In 2006/07 US bio-refineries used 46 MMT (17.2%) of corn for ethanol production. In 2007/08, USDA estimates that the corn for ethanol will be 86 MMT (26%), an increase of 40 MMT over 2006/07. This when the production is likely to increase by 59 MMT, as per USDA estimates.

In 2006/07, the amount of DDG’s produced by the bio-refineries was 12 MMT, which replaced the similar amount of corn, which was then used by other sectors.

There are many more facts that can be seen in the document prepared by National Corn Growers Association (http://www.ncga.com/) on the above debate. The document can be downloaded following the link given below.

http://www.ncga.com/news/OurView/pdf/2006/FoodANDFuel.pdf

Amit Sachdev

India Representative

U S Grains Council

bluecross303@gmail.com