Commodities stable in India; Cost of production of broiler up in India

Stable Commodity prices in India

Maize

Maize prices averaged Rs.6700 – 6750 per MT at the market yard this week, higher by 2% over last week and 3.5% higher than last year’s price at the market yard. The current delivered prices is ranging from Rs.7100 – 7300 per MT for areas close to production centres and about 7800 – 8000 per MT for areas away from production centres. Spot prices in Nizamabad and Karimnagar are close to Rs.7000 per MT while in Davangiri (Karnataka) the prices are lower at Rs.6600 per MT range. In Rajashthan and Madhya Pradesh markets the Spot values are ranging are close to Rs.8300 per MT, thus affecting the feed prices for poultry farmers in the northern regions. Future prices are ranging from Rs.7450 per MT for Dec and going upto Rs.8000 per MT for Mar 2008, this despite the fact that a small crop will be in the market in Feb/Mar 2008 in Tamil Nadu, Andhra Pradesh and Bihar.

Pearl Millet

Pearl Millet (Bajra) prices have moved up by about 6% this week to reach Rs.6800 – 6900 per Mt levels, but the prices are lower than last year by 10%. Against maize, the prices are higher by 2.3%.

Sorghum

Sorghum (Jowar)are down by 4% compared to last week, reaching Rs.9050 per MT at the market yard. The prices are still higher than last year by 19% and also against maize the prices are higher by 34.5%.

Barley

Barley prices are lower at Rs.10,200 per MT down by 9% over last week, but are higher than last year by 34%. In the coming years, the requirement of malt is going to skyrocket as more and more breweries are planning to come to India and planning to setup breweries. SPOT Price at Jaipur were over Rs.12300 per MT.

US markets closed higher than last week on higher export numbers. Reports indicate that over 55% of USDA’s estimated corn exports have already been done. CBOT closed at $153.14 per MT for Dec and $159.67 per MT for Mar deliveries.

Cost of production of broiler up in India

Increase in corn and soy-meal prices have increased the cost of production of broiler in all regions of the country. While corn in South is reported to be delivered at Rs.7100 – 7300 per MT, in North India the delivered prices are close to Rs.8200 – 8300 per MT. Soy-meal prices have reached Rs.15,600 per MT delivered at almost all locations. Based on a corn soya ration with 55-58% corn and 30% soy-meal, the feed price are close to Rs.13,500 – 13,700 per MT, up from Rs.12,000 per MT last year, when soy-meal prices were much lower. The prices of feed in the last 45 – 60 days have increased by about 8% (over Rs.1000 per MT) at some locations, only due to increase in soy-meal prices.

The cost of production of broilers (live) is ranging from Rs.35.5 per kg for integrators to Rs.41 per kg for farmers in North India, who are buying chicks. One of the major reasons for a high cost of production in North is high mortality as well.

The cost of production is likely to go up further in North India in the winter months as heating costs (heating of sheds for brooding) will be added on the costs.

Amit Sachdev

India Representative

U S Grains Council

bluecross303@gmail.com

Commodity Markets Stable; DDG's - a valuable source of protein & energy; Hygiene standards for Indian Street Food

Commodity markets stable

Due to good rains in Khariff season and better prospects in Rabi crops has raised the estimates for agriculture growth to over 4% in 2007/08. As the Minimum Support Prices (MSP) of wheat has been increased, there are expectations that farmers will grow more wheat (75.5 MMT) and sell it to government at the higher price.

Maize

For the past two weeks the maize prices at the market yard have been stable at Rs.6600 – 6650 per MT and higher than the MSP offered by GOI of Rs.6200 per MT. The prices are similar to last year prices. There are strong indications of export of maize to SEA region and reports indicate FOB (India port) prices of USD 220 – 230 (Rs.8690/9085) per MT or CNF values of USD 240 – 245 (Rs.9480 – 9677) per MT. Markets are experiencing higher arrivals after the festival season, which is keeping the prices stable despite higher demand by poultry/starch and exporters.

Pearl Millet (Bajra)

The prices have remained stable for last two weeks at Rs.6500 per MT and this week are down by 18% over last year. Against maize prices, Pearl Millet is trading at 2% lower values.

Sorghum (Jowar)

This week sorghum prices are down by 3% over last week to Rs.9450 per MT, but are still higher than last year by almost 27%. There have been some queries for export of Sorghum, but due to poor availability and high prices, it will be difficult to export sorghum from India. Prices are also higher than maize by 43%.

Barley

Prices have short up to Rs.11000 per MT at the market yard. Availability is poor due to higher exports. Prices are over 30% higher than last year prices. Market reports indicate an increase in malt demand by brewery industry as the growth is estimated at 15-20% and this growth is likely to continue for the next couple of years.

USDA in its last report dated Nov 09, 2007 has reduced the maize production in US from 338.29 MMT to 334.48 MMT due to lower anticipated yields. The average price to the US farmer though has been increased from USD 114.16 – 137.78 per MT to USD 125.97 – 149.59 per MT.

The maize prices on CBOT were down for Dec / Mar deliveries at $149.36 and $156.05 per MT against last week’s $156.26 and $159.05, down by 4.4% and 1.88% respectively.

Dried Distiller’s Grains with Soluble – a valuable source of protein and energy

New reports indicate that the energy value of DDG’s is close to 3000 Kcal/kg (through fat) and the protein value is about 27 – 28% and fibre is about 5.8 – 6%. Though the product is low in Lysine, it can be used in layer, dairy, swine, and broiler rations without any problems and lysine can be added. On a recent visit to some of the dairy farms in USA, the DDG’s was being used at 5% levels in milking and dry animal rations. Current prices are about 95% of corn values, and this is likely to remain as the corn prices are going up and demand is also soaring.

There are still some issues that might need to dealt with – like flow-ability – which experts tell is not a problem if the product is cooled for at least 24 -36 hrs before dispatch. In addition, making pellets of DDG’s prior to dispatch will solve the problem of handling and flow-ability to a great extent. Work is being done at Northern Crop Institute, Fargo, North Dakota, under Dr.Kim Koch to pellet DDG’s. On the product consistency, It is recommended that buyers should source the material from one / two ethanol plants so as the product is consistent. As the new technology of fractionalization comes online and other plants start using the same, the product will be more consistent.

Hygiene standards for street food in India

Indian love to eat out – specially on the streets, be in tangy traditional North Indian ethnic foods or omelette's, boiled eggs in winter or meat soups in winter or other dishes year round, which may or may not contain meat. Ministry of Food Processing Industries along with Ministry of Health is working on hygiene standards for street food, wherein the vendors will need to have special carts which will have surfaces that could be cleaned, water for cleaning the utensils (or use throw away) and also have some systems to keep the cold food cold like meats etc and hot food hot.

The question still remains on the sourcing of food. If the food raw material like mat including chicken etc is not sourced from a certified supplier, keeping it in clean environment is not going to do much good as the bacterial contamination at the point of slaughter or delivery would be enough to make the product unsuitable for consumption. It is important that the ministry looks at the complete package to make street food more safer and making it mandatory for vendors to source food raw material like meat etc from certified suppliers.

The implementation of the integrated food law is one step in this direction and it would be beneficial for companies to sponsor such street food carts.

Amit Sachdev

India Representative

U S Grains Council

bluecross303@gmail.com

Grain Markets in Turmoil

Grain markets in turmoil

Maize prices are 2.3% over last week reaching Rs.6600 – 6650 range at the market yard. The prices are also 8.3% higher than last year in the last week of October 2006. Possible reasons of the increases in prices is export consolidation and bad weather in parts of Tamil nadu and Andhra Pradesh holding deliveries. Average Oct 2007 price was Rs.6549 at the market yard, about 8.77% higher than Oct 2006 prices. though the prices are lower than Sept 2007 average price by 4.92%.

Pearl Millet (Bajra) prices for end of Oct 2007 reached Rs.6166 per MT at the market yard, about 4.1% lower than last week. Prices are also lower than last year by 6.7%. As against maize the prives are lower by 7%, but pearl millet is not being included in poultry rations, as the differential is not higher. Average Oct 2007 price was Rs.6385, down by 2.10% over Sept 2007 price. Average price is also lower than Sept 2007 price by 2.57%.

Sorghum (Jowar) prices are lower than last week values by 1.7% at Rs.9535 per MT, but are 21.2% higher than last year. Against maize, the prices are 44% higher . Average sorghum prices for Oct 2007 was Rs.9218, about 1.13% lower than Sept 2007 prices, But higher by 31% over Oct 2006 prices on an average. Against Maize, the average price is 29% higher.

Barley prices dipped by 7.3% over last week, to reach Rs.10200 per MT at the market yard. The prices are about 48% higher than last year. Average prices for Oct 2007 was Rs.10400, higher by 34% over Oct 2006 and 11.6% higher than Sept 2007.

GOI has estimated the production of maize in India at 13.03 MMT for Oct 2007 against 11.48 MMT for Oct 2006 harvest and 3.0 MMT for Fed/March 2008 against 3.55 MMT for Feb/March 2007. The total production is estimated at 16.03 MMT for 2007 against 14.98 MMT for 2006. With the wheat MSP increased to Rs.10,000 per MT, many analysts believe that the land under maize in Bihar and Uttar Pradesh and Madhya Pradesh may go down and shift to Maize. In addition high prices of wheat in the local market will force many a subsistence farmers to consume maize as food and not sell the same to procure wheat from the open market, thus reducing the market surplus.

The total demand of maize for all sectors including poultry, starch, livestock, brewery, exports etc is estimated at 15.93 MMT, any reduction in Rabi (Feb/March 2008) harvest, increase in human consumption and higher exports could trigger an unusual increase in prices of Maize in India.

Corn prices on CBOT moved up due to high energy values. Corn on CBOT for Dec 07 and March 08 closed at $148.42 and $155.31 per MT respectively, up by $2 – 2.26 per MT. Corn harvest is 73% complete and almost 84% of soybean has been harvested in the US.

DDG’s prices are going up again and if indications are correct it will be close to $290 – 300 per MT for CNF India for Jan – Feb deliveries. At these prices, it is little lower than Soy-meal, which is currently selling at $375 per MT delivered at some of the destinations.

Amit Sachdev

India Representative

U S Grains Council

bluecross303@gmail.com