Maize prices rise, other stable; Freight makes the difference

Maize prices rise, others stable

Maize prices have started to show a spike again this week, on reports of exports open to Pakistan and also a lower Rabi crop (2.54 MMT against 3.54 MMT last year). Prices in the market yard on an average for loose maize were reported at Rs.7200 - 7300 per MT range, about 1.3% higher than last week. Prices were similar to last year at the market yard. Prices in the SPOT market also rose a bit, Nizamabad Rs.7257 per MT; Ratlam Rs.8300 per MT; Davangere Rs.6877 per MT; Nimbaheda Rs.8375 per MT; and Karimnagar Rs.7212 per MT. Future prices also closed higher, with March Rs.8140 per MT; April Rs.8490 per MT; May Rs.8800 per MT; Jun Rs.8990 per MT. Demand from exporters is also increasing which is giving support to prices.

Pearl Millet (Bajra) prices have remained stable this week and were reported to be lower than maize prices by 8%. Layer farmers may be inclined to use some Pearl Millet in their rations, but prices are likely to rise as the production is estimated to be lower at 8.26 MMT against last years 8.42 MMT.

Sorghum (Jowar) prices gained 7.1% over last week and 15% over last year, reaching Rs.9700 -9800 per MT range. Prices are about 35% higher than maize. Total sorghum production is reported little higher than last year at 7.34 MMT.

Barley prices moved down by 3% this week to Rs.9877 per MT, but the prices are higher than last year by 16%. Barley requirement by the malt sector is expected to grow by 16% to reach 350 TMT, which the production has grown only by 2.2% to reach 1.36 MMT against last year's 1.33 MMT. And if exports do happen again, prices may remain higher.

Prices of corn on CBOT moved up a bit to USD 205 - 210 (Mar - May) delivery.

Freight makes the difference

While the corn prices in US move higher, freight prices are also moving up, giving support to export of maize from India to South East Asian markets. FOB US Gulf prices were indicated at USD 228 - 229 per MT, freight cost to Japan was indicative at USD 107 per MT, making delivery costs close to USD 325 - 326 per MT.

Indicative FOB PNW prices were USD 283 – 284 per MT, while the PNW – Japan freight is indicated at USD 62 per MT, making corn delivered at USD 342 per MT.

Indian corn is being offered at USD 235 per MT (FOB) and which freight at USD 38 – 40 per MT to South Asian destinations, it can be delivered at USD 275 – 280 per MT. With a spread of over USD 40 between Indian and US Corn, another round of buying by exporters cannot be ruled out. If that happens, India is likely to face a corn crunch from July 2008 onwards.

Amit Sachdev
India representative
U S Grains Council
bluecross303@gmail.com

Stable cereal prices in India, but higher world demand will fuel prices; India to advance biotech approvals as the world embraces the technology

Stable cereal prices in India, but higher world demand will fuel prices

Maize prices have remained stable this week at Rs.7100 – 7200 per MT range at the market yard. Reports indicate some flow of material into Bihar markets, priced at Rs.7400 – 7500 per MT at the market yard. The average prices in India are lower than prices last year by 4 – 5%, on reduced demand. As the east starts to place chicks, some demand will be seen in coming weeks.

The Economic Coordination Committee (ECC) of Pakistan gave formal approval to import maize from India to cater to the domestic needs. The imports will be duty free and can be implemented through land route. Current;y wheat is being used in Pakistan to fee poultry and livestock. Exports to Pakistan will further increase the maize prices in India.

Pearl Millet prices moved up by about 1% over last week to Rs.6450 – 6500 per Mt range. Prices are still lower than last year by 4.6% on an average. Against maize the prices are lower by about 9%.


Sorghum prices have moved up by 2% to Rs.9100 range, but are still lower than last year prices by 3.5%. Against maize the prices are higher by 28%.

Barley prices were down this week by 3%, to Rs.10160 – 10200 per MT range at the major markets in North India. Prices are still higher than last year by 22%.

As the weather has been much colder than normal in the northern belt, it might affect the crops negatively. There is more concern about wheat crop than the coarse cereals.

Corn on CBOT was up for Mar and May deliveries, closing at $202.65 and $207.47 per Mt respectively. US Gulf FOB indicative rates for corn were ranging from $226 -227 per MT.
DDGS prices on the other side were lower this week by $3 – 6 per MT over last week. DDGS at current level makes an attractive feed ingredient in poultry and dairy rations. CIF, New Orleans value for DDGS is indicated at $ 196, while FOB US Gulf process was $ 202 per MT. This is for 36% profit DDGS.

Freight rates tended to go up this week. Indicative values for US Gulf Japan were $ 105 per MT, while PNW Japan was $63 per MT.

As per the FAO report this week, world cereal supply is likely to remain tight and will drive prices higher in the current marketing year. To offset the price increase it may require significant increases in production of more than one season's cereal crop for markets to regain their stability and for prices to decline significantly below the recent highs.

World cereals demand is expected to rise 2.6 percent to 2.120 billion tons , about 1.6 percent above the 10-year average, in 2007/08 and would outpace output growth, putting a pressure on already thin global stocks. High energy and feed demand has triggered a more rapid fall (8.6%) in coarse grain stocks, to estimated 156.1 MMT by the end of 2007/08 season against previously expected 170.8 MMT as per the FAO report.

India to advance biotech approvals and more farmers in the world embrace the technology

The Supreme Court this week lifted the ban on approval of new GM crops in India, and asking Genetic Engineering Advisory Committee (GEAC), which works under the Ministry of Environment and Forests (MoEF) to set in place proper guidelines and bio-safety norms. This is a victory of sorts for those who are in favour of the new technology.

New trials and approvals were banned in Sept 2006 and in May 2007, the ban was modified and field trials were allowed. The new order this week, vacates the old order and gives way for approval of new crops using the technology.

Since 1996, biotech crops have been grown by millions of farmers across the world and in most cases resource poor farmers in the developing world. It has helped increase farm incomes, through reduced costs and/or improved yields. It has also helped in reducing pesticide applications and reducing green house emissions. Of the 12 million farmers worldwide who grew biotech crops in 2007, 11 million are "resource-poor, as per a report from International Service for the Acquisition of Agri-biotech Applications (ISAAA).

In 2007, a record 282.3 million acres of the world's cropland were planted with soybeans, corn, cotton and other biotech crop, an increase of about 12 percent from the previous year, according to ISAAA.

In the developing countries, Argentina led developing countries with about 47.2 million acres in biotech corn, soy and cotton, followed by Brazil, which had just over 37 million acres of biotech cotton and soy.

In the European Union, Spain ranked highest with about 173,000 acres of biotech corn but 12th overall, behind Paraguay, South Africa, Uruguay and the Philippines.

The use of new technology has already helped the farmers in India reap a bountiful cotton crop, and farmers planted 15.3 million acres of biotech cotton in 2007, its only biotech crop. The new generation of biotech crops will help more farmers reap the benefits of the technology.

Brazil’s National Biotechnology Council has also approved use of biotech corn this week. Brazil, is the third largest corn producer after U.S. and China. Brazil’s corn crop this year is expected to be 53.4 MMT against 51.4 MMT last year. Brazil farmers for the last couple of years were allowed to grow only biotech soybean and cotton. The move to grow biotech corn will certainly help the country boost its production potential.

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

Commodity prices remain low

Commodity prices remain low

Maize prices remained similar to last week at Rs.7137 per MT, but lower than last year prices by 3.5% at the market yard. Prices in India are stable as the buyers for exports are low. Sea freights have eased, making US corn competitive in the Asian markets. Price of maize in the future markets though have started to move up. Prices were up from 0.4 - 3.4% for Feb - May deliveries.

Pearl Millet prices at Rs.6423 per MT were lower than last week by 1.4% and lower by 4.1% over last year. Against maize the prices of pearl millet are lower by 10%, making it a material that can be used in poultry feeds, broiler and layer rations to reduce costs.

Sorghum prices at Rs.8914 per MT were lower than last week prices by 6.4%, but higher than last year by 3%. Against maize the prices are higher by 25%.

Barley prices at Rs.10454 per MT remained stable this week, but higher than last year by 23%. There are reports that companies may need to increase the prices of beer as the prices of malt have gone up.  The price of barley in the future market remained stable and were reported Rs.12240 per MT at jaipur market, higher than last week by 1.8%.

Corn prices on CBOT closed at $200 for Mar delivery and $205 per MT for May deliveries. Though India continues to export corn, based on previous contracts, current freight prices have made US corn more feasible in Asia. No new contracts are likley to be signed unless maize prices in India come down or freight prices are up.

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

Commodity prices move up; Zoning of poultry a must; India Dairy Plan - 2021

Commodity prices move up

Maize prices moved up by 1.6% this week to Rs.7150 per MT at the market yard. The prices are similar to last year at this time of the year. Average monthly price for maize was Rs.7075 per MT against Rs.7096 per MT last year. The low prices has been attributed to bird flu episode in West Bengal. GOI has clearly indicated that ban on exports or Soybean meal is not being considered. This was clarified at a meeting on Jan 30, 2008. SPOT prices at various markets are somewhat stable, while prices at Davangere (Karnataka), Nizamabad and Karinmagar (Andhra pradesh) were between Rs.7000 – 7300 per MT, prices in Raltam (Madhya Pradesh) and Nimbaheda (Rajasthan) were quoted over Rs.8300 per MT.

Pearl Millet (Bajra) prices moved down slightly by 1.3% over last week to Rs.6500 per MT and are about 4.2% lower than last year prices. Against maize the prices are lower by 8.7%. Monthly average prices for Jan 2008 were Rs.6600 per MT against Rs.6950 last year.

Sorghum (Jowar) prices also moved down by 3.4% over last week to Rs.9530 per MT, but were 10.7% higher than last year. Against maize the prices were 33% higher. Average prices for Jan 2008 was Rs.9430 per MT against Rs.8730 per MT in Jan 2007.

Barley prices moved up by 13% over last week to Rs.10509 per MT at the market yard. Prices are 11.7% higher than last year. Average price for the month of Jan 2008 was Rs.10143 per MT, much higher than last year’s Rs.8275 per MT. Barley spot spices in Jaipur market on Friday were about Rs.12000 per MT and any chances of the prices moving lower are subject to the crop harvest and availability in Mar 2008. Prices for May – July were quoted over Rs.10000 per MT.

Corn prices on Chicago Board of Trade (CBOT), closed higher for March and May deliveries at $197 and $202 per MT respectively.

Zoning of poultry a must

OIE Terrestrial Animal Health Code – 2005, defines ZONE/REGION as part of a country containing an animal sub-population with a distinct health status with respect to a specific disease for which required surveillance, control and bio-security measures have been applied for the purpose of international trade.

A compartment is defined as one or more establishments under a common bio-security management system containing an animal sub-population with a distinct health status with respect to a specific disease or specific diseases for which required surveillance, control and bio-security measures have been applied for the purpose of international trade.

CHAPTER 1.3.5. in the Terrestrial Animal Health Code (2007) covers ZONING AND COMPARTMENTALISATION. For the purpose of international trade Zoning and Regionalization is same.

As per OIE, Zoning and compartmentalisation are procedures implemented by a country, within its territory for the purpose of disease control and/or international trade. While zoning applies to an animal subpopulation defined primarily on a geographical basis (using natural, artificial or legal boundaries), compartmentalisation applies to an animal subpopulation defined primarily by management and husbandry practices related to bio-security. In practice, spatial considerations and good management play important roles in the application of both concepts.

As well as contributing to the safety of international trade, zoning and compartmentalisation assists in disease control or eradication. Zoning also encourages efficient use of resources within certain parts of a country and compartmentalisation allows the functional separation of a subpopulation from other domestic or wild animals through biosecurity measures, which a zone (through geographical separation) would not achieve. Following a disease outbreak, the use of compartmentalisation may allow a country to take advantage of epidemiological links among subpopulations or common practices relating to biosecurity, despite diverse geographical locations, to facilitate disease control and/or the continuation of trade. (adapted from www.oie.int).

In view of the current status of Bird Flu in India, GOI has not accepted the demand of the poultry industry on zoning of poultry areas. Zoning has been effective in controlling Foot & Mouth Disease in India and the international trade in Buffalo meat has flourished. If it is possible to demarcate specific areas from where the demand of foreign and domestic markets is met (eg. Andhra Pradesh and Tamil Nadu for eggs, Ajmer in Rajasthan, Parts of Haryana and Punjab also for eggs, Areas with contiguous broiler populations in Coimbatore, Pune, Bombay-Nashik etc for Broilers, ), it will help the industry in the long run.

India’s Dairy Plan – 2021

GOI has embarked on a massive plan to develop the dairy industry in India. In 2004/05 the milk production was estimated at 84 MMT (0.23 MMT/day) of which about 48% (0.11 MMT/day) was consumed by the villages and producers as per an estimate, 52% (0.12 MMT/day) was available for sale and consumption in urban areas.

Of the total milk produced in the country about 90% comes from the 325 identified high milk districts in 14 states. It is important to strengthen these and at the same time provide incentives to the other areas, which contribute 10% on the milk.

In 2007/08 India produced 100 MMT of milk (0.27 MMT/day) as per GOI. The demand of milk is rising and the demand in 2021/22 in expected to be 172 MMT as per GOI estimates, almost doubling in 17 years. It would need increments of at least 5 MMT of milk production every year, i.e., a 6% average growth to fulfil the demand in 2021/22.

The dairy sector has already covered a base and reached 100 MMT in 2007/08 against the 95 MMT estimated based on 2004/05 prediction. Taking 2007/08 as a base year, the milk production in India in 2010 is estimated at 112.48 MMT, for which atleast 56.24 MMT of balanced feed or individual ingredients will be needed. In 2015, the production would be close to 136.85 MMT requiring 68.42 MMT of feed/ingredients and for 172 MMT in 2021/22, almost 86 MMT of feed/ingredients will be required.

There is no doubt that there is a potential to produce the quantities of milk that is required. What is needed is good germ-plasm, that will increase the productivity, but that alone will not help. Proper balanced feed, management, infrastructure (collection and processing) and marketing systems are all needed to reach the target production.

GOI through a notification has finalized the protocol for the import of bovine genetics which will certainly help the sector in importing good quality semen and embryos in India, but it is also important to make the dairy farmers aware of the need to feed and manage the animals scientifically, without which it will be difficult to meet the target.

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