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.
Amit Sachdev
India Representative
U S Grains Council
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