Commodity prices move up in India; USGC completes corn PS&D Road Show in India

Commodity prices move up in India

Corn prices were stable at Rs.7200 per MT, just about 1% lower than prices last year. Monthly average for Mar 2008 was Rs.7340 per MT, just about 1.2% higher than Mar 2007.

Pearl Millet (Bajra) prices were up this week to Rs.7300 per MT, adding 4% over last week’s prices. The prices were higher than last year’s prices by 14.3%. Pearl Millet prices moved up this week against maize and were up by 1.7%. Monthly average prices for Mar 2008 were Rs.7000 per MT, against Rs.6750 per MT, 3.8% higher.

Sorghum (Jowar) prices reached Rs.10500 per Mt this week, adding 4.9% over last week’s price. The price was 26.2% higher than last year. Monthly average for Sorghum was Rs.9750 per MT up from last year’s prices of Rs.8450 per MT, up 15.3%. Against maize, the prices this week are higher by 46.2%.

Barley prices this week at averaged Rs.9968 per MT at the market yard, 1% higher than last week and 28% higher than last year’s prices. Monthly average was Rs.10080 per MT, up from Rs.7950, an increase of 26.6% over last year’s prices.

Corn prices on CBOT moved up this week for $220 - 225 per MT for May - July delivery.

USGC completes corn PS&D Road Show in India

US Grains Council invited Dr.Simla Tokgoz, a Research Associate at Food Agriculture Policy Research Institute (FAPRI), at Iowa State University to provide an insight to the Indian end users sector on the corn supply and demand in India and the world market. Mr.Ken Wardsworth, farmer member of US Grains Council from Michigan State was also in India to provide an insight on US corn production and the planning process that goes into making planting decisions.

The team travelled to Ahmedabad, Bombay and Coimbatore this week to meet with the starch, poultry and feed sector and provide the supply demand information to them.

Dr.Simla Tokgoz, provided the historical and future prospective on corn production in US, China, Argentina, Ukraine, South Africa and Mexico. World supply and demand situation was discussed in detail. Dr.Simla and Mr.Wadsworth pointed out that US had enough corn to supply to the world needs even though there will be increased usage of corn in biofuels production following a mandate by US to produce 15 billion gallons (56.7 billion litres) by 2020. It was also pointed out that all is not wasted when biofuels are produced and DDG’s a co-product is also produced which is used by the livestock sector.

It was pointed out that the prices of corn are likley to remain high in midium to long term and the volatility in prices will be seen in short term.

Dr.Simla pointed out that China will not be in the market to sell corn in near future as local demand is growing much faster. Even in India the demand is growing as per the model created by FAPRI, in spite of the increased supply of corn domestically, India could be a net importer by 2015, due to increased demand from poultry, starch and dairy sector.

Dr.Simla argued that it wrong to point the finger to biofuels only for the increased commodity prices. Growth of economy in other countries also like China, India and Brazil in increasing demnd of commodities which is also playing a role in the increased prices.

A higher demand of meat milk and eggs by the high income middle class in India is a factor in this increased demand of corn in India, as more Indian people climb the ladder to prosperity, the demand will much higher.

It was also pointed out that the demand in other countries needs to be looked into like Brazil, where livestock production is increasing due to increased investments and export opportunities of value added products.

End users will need to change the way they do business and hedge in the futures to manage risks also will need to add different value added products in the portfolio to increase profitability.

The presenations made during the road show are available on request.

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

Stable Maize, other prices move up

Stable maize, other prices move up

Maize prices were down this week by 3.7% over last week to Rs.7200 per MT at the market yerd. The prices were also lower than last year by 1%. Maize futures have remained stable though prices for July were down. Prices at different delivery points remained stable. One of the reasons attributed to the stable /lower prices is the bird flu episode in West Bengal and higher deliveries in Rabi producing areas. The exports continue and market reports indicate exports of 1.7 MMT and might cross 2.0 MMT.

Pearl Millet (Bajra) prices were up by about 4.1% over last week to Rs.7030 per MT and also 9.3% higher than last year. The prices are just about 2% lower than maize.

Sorghum (Jowar) prices also moved up by 4.7% this week to reach Rs.10000 per MT and were 12.5% higher than last year. The prices were also higher than maize by about 40%.

Barley prices remained stable at Rs.10050 per MT, but were 14.5% higher than last year. Future prices were down in wake of new arrival. SPOT price at Jaipur was quoted at Rs.11750 per MT.

Price of Corn on CBOT was $199.79 for May and $204.42 per MT for July. FOB prices (US Gulf) were ranging from $220 – 221 per MT.

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

Commodity prices - a mixed bag; Rising Food prices - countries open to import GM Commodities; Retail Chains need to train personnel

Commodity prices - a bixed bag

Maize prices were down by about 1.3% this week to Rs.7450 per MT, possibly following the report of new outbreak of bird flu in West Bengal. The prices were about 3.6% higher than last year. Prices were lower at almost all delivery centres across the country.

Pearl Millet (Bajra) prices were down by about 3% this week to reach Rs.6748 per Mt at the market yard. The prices are lower than last year by about 3%. Against maize the prices are lower by 9.4%. The availability is good in northern part of the country, making is possible for the egg producers using the commodity in rations to reduce cost of feed and thus cost of production of eggs.

Sorghum (Jowar) prices have jumped to RS.9565 per MT, over 9.5% higher than last week and also 12.8% higher than last year. Against maize the prices are higher by 28.4%.

Barley prices came down this week to Rs.10060 per MT at the market yard, just about 2.1% lower over last week. Prices are higher than last year by 21.7%. Barley prices this week at Jaipur were down slightly to Rs.12094 per MT. Futures for April, May , June and July were up to Rs.10950, Rs.11360, Rs.11490 and Rs.10644 per MT.

Prices of Corn on CBOT was up this week for Mar, May and July to $214.71 (+4.71), $220 (+5.14), $224.87 (+4.87) respectively.

Rising food prices – countries open to import GM commodities

In the wake on increasing food prices countries like Korea have started accepting the Genetically Engineered Food crops, including corn.

South Korea, last month purchased its first GM corn for use in foods. Earlier GM products were allowed to be used in animal feeds. Korea will be using GM corn to produce starch and sweetener, ingredients that are widely used in a range of food products, like confectioneries, beverages and ice creams.

Demand for commodities like Soybean and corn in increasing for feeding livestock and increased use in bio-fuels production. In addition, farmers are also increasingly planting more GM crops, due to benefits offered by the technology, thus reducing the availability of non-GM commodities.
In countries like, Philippines, biotech corn is sold at premium prices because of the higher grain quality, encouraging farmers to invest in GM seeds.

In some cases the price differential between GM and non-GM is high, that making a decision in favour of new technology makes business sense.

The Korea Food and Drug Administration has designated crops such as soybeans, corn and bean sprouts and 31 foods made with them subject to GM labelling. But they are exempt from GM labelling if they contain less than 3 percent amount of GM substance or if their final products carry no GM DNA or protein. Cooking oil made with genetically modified soybeans is also exempt from GM labelling requirements, because only fat is extracted during the process and such cooking oil carries no GMO protein.

Korea allowed imports of the 23 GM corn varieties whose safety is guaranteed by U.S. food safety authorities and which are cleared for us in the countries of origin for feed and food.

GM crops covered 114 million hectares around the world last year, an increase of 13% over the year, according to ISAAA. Twenty-three countries have approved growing of biotech crops while 29 countries are allowed to import them. The US is the largest exporter of GM crops.
EU regulators are also likely to approve imports of a genetically modified (GM) maize type this month that should help livestock farmers secure extra supply of raw material to feed their animals.

Animal feed makers and livestock farmers have been unable to pass on soaring costs of grain over the past year to retail consumers.

Retail chains need to train personnel

While retail chains have come up across the country and there is no doubt have provided convenience to consumers to make shopping for food a good experience, it is important that the people managing the food SKU’s are trained properly on the issues that affect the product.

There are several occasions when the product is wrongly displayed (frozen product in chilled section or vice a versa), as was recently seen in Calcutta. Even vegetables that need to kept at Zero Degree C, if kept at 4 deg C, loose moisture and the quality deteriorates.

It is important for the staff to understand the temperature requirements of each and every fruit, vegetable that is available at the shop and the staff should read the labels on the product before it is put on display at the counter.

More information about the temperature requirements and postharvest techniques can be downloaded from the link below.
http://postharvest.ucdavis.edu/

If the product has gone bad, deteriorated due to the temperature shock, it must be removed from the shelf and the consumers advised that the product is no longer available for sale.

Amit sachdev
India Representative
U S Grains Council

bluecross303@gmail.com

Commodity prices move up; FAPRI report – Commodity prices to remain high

Commodity prices move up

Maize prices moved up this week by 5.6% over last week, reaching Rs.7550 per MT at market yard. The prices are also higher than last year by 3%. SPOT rates of maize at various markets Davangere Rs.7020 per MT; Nizamabad Rs.7550 per MT; and Karimnagar Rs.7442 per MT were higher than last week prices at these markets. Prices for future deliveries for May and June moved up to Rs.8955 per MT and Rs.9350 per MT from last week’s Rs.8900 per MT and Rs.9150 per MT respectively.

Government of Pakistan on the other side has removed the duty in imports if maize and there are queries for import from India. Reports indicate price of $250 (CNF Pakistan) being offered to the end users in Pakistan via Wagah border.

Pearl Millet (Bajra) prices also moved up this week by 3%, reaching Rs.7000 per MT, though the prices remained lower than last year by 4% and also against maize the prices remained lower by 8% at the market yards.

Sorghum (Jowar) prices on the other hand have moved lower by 5.5% to Rs.8900 per MT, but the prices are still higher than last year prices by 10%. Against maize the prices are higher by 18%.

Barley prices have started to climb down as the date with new crop comes near. Prices slumped by 4.5% this week to reach 10280 per MT, but prices are higher than last year by about 45%. SPOT prices at Jaipur were down to Rs.12257 per MT from Rs.12435 per MT last week. While April delivery prices are up to Rs.10754 per MT against 10350 per MT last week, prices for May – July delivery were lower at Rs.10400 – Rs.11100 per MT range.

Corn on CBOT for March delivery was down from last week’s close to 214.94 to $210 per MT. May delivery also was down to $215.42 from last week’s close at 219.62. July futures closed at $220 per MT.

World commodity prices to remain high – FAPRI report

A report by Food and Agricultural Policy Research Institute (FAPRI) has indicated that the commodity prices are likely to remain at historic highs in the next decade. FAPRI has come out with their new 10 year projection for U.S. and international commodity markets.

The world corn price which increased to $ 198.17 per MT in 2007/08 because of increased demand from two sector, ethanol and livestock and also exports to growing markets, will sustain the high price level over the rest of the decade.

The world wheat price is expected to settle at $264.05 for 2017/18 period as per FAPRI from a high of $313.55 per metric ton. The lower prices settlement will be due to adjustments in supply and demand as per the report.

Other forecasts by FAPRI include:

1. Global net trade in ethanol is projected to reach 13.64 billion litres by 2017, up from the current 9.56 billion litres. The prices of ethanol as per the report are likely to lower in the first half of the decade due to strong supplies. The prices are likely to stabilize at $0.40 per litre by 2017.

2. The price of sugar over the next decade due to lower exportable surplus from EU and higher ethanol production in Brazil will be higher by 10.7% over the next decade

3. Within the Soybean complex the trade will increase by 17-32% and the production of soybean will increase to 297 MMT by 2017.

4. Consumption of Palm oil will increase by 46% in the next decade.

5. Sustained income and population growth will lead to higher per capita meat consumption and the meat production will reach 248.5 MMT and the meat trade will also expand to 20.9 million metric tons by 2017/18.

6. The world prices of butter, cheese, non-fat dry milk (SMP), and whole milk powder, increased to record levels in 2007, due to global demand and limited growth in supplies. The higher prices has led to higher investments and higher production in many countries and because of the higher production the world dairy prices are expected to taper in mid-term, but strong economic growth and rising population, will lift the demand and higher prices are forecast in the long term by FAPRI.

Due to the strong demand of commodities including oil, wheat, rice, pulses etc due to sustained economic growth in India and all across Asia, the prices of commodities will remain high and it may not be possible to keep a reign on the inflation, unless some drastic measures are taken. The rate of crossed the 5% RBI limit to reach 5.02 for the week ending Feb 23, 2008.

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

Stable commodity prices; Common man's budget to boost consumption; Bird Flu update - vigil required

Stable commodity prices

Corn prices remained stable this week at Rs.7200 per MT (loose) at the market yard. The prices were lower than last year by 2%. Even though the prices are lower at market yards, delivered prices are up due to increased packaging and delivery costs. Average price for Feb 2008 was Rs.7145 per MT, which is 3% lower than last year. The lower prices are due to the lower off take by the poultry sector.

SPOT prices across the markets were reported higher over last week. Davangere Rs.6889 per MT; Nizamabad Rs.7457 per MT; Nimbaheda Rs.8375 per MT; Karimnagar Rs.7325 per MT; Ratlam Rs.8300 per MT. Corn in future markets also rose, Mar 8135 per MT; April 8580 per MT; May 8900 per MT; Jun 9150 per MT.

Pearl Millet (Bajra) prices were up by 1% over last week to Rs.6800 levels, but the prices have remained lower than last week by 4% at the market yard. Against maize the prices are lower by 6% and on an average the prices will be lower in North India, where pearl Millet is being used in layer rations. Average prices of Pearl Millet in Feb was Rs.6615 per MT, about 2.6% lower than Feb 2007.

Sorghum (Jowar) prices were down by 3.4% over last week to Rs.9400 per MT, but prices were higher than last year’s prices this week by 3.8%. Against maize the prices were higher by 32%. Average Feb 2008 prices were Rs.9300 per MT against Rs.8900 per MT last year, higher by 4.5%.

Barley prices were up to Rs.10760 per MT, at the market yard, about 9% higher than last year. Prices are higher than last year by 29%. Average price for Feb 2008 was Rs.10314 per MT against Rs.8420 per MT in Feb 2007, about 22.5% higher than last year’s Feb value. SPOT prices at Jaipur was Rs.12485 per MT. Barley in the future markets was reported at levels close to 10500 per MT for April – Jul delivery.

Corn prices on CBOT were up over last week. Mar delivery closed at $ 214.94 per MT against $205.60 per MT last week. May delivery also closed higher at $219.04 per MT against $210.62 per MT last week.

Common man’s budget to boost consumption

India has registered a growth of over 8% for 12 successive quarters and the budget 2008/09 may well be the one to continue the growth at close to 9% in the coming year. Keeping inflation under check has been the mantra for the government and the finance minister has just done that in the budget announced on Feb 29, 2008.

Inflation for the week ended Feb 16, 2008 was 4.89%, a nine month high. The high rate of inflation is due to costly petroleum products and some food items. This is the fourth week in a row when inflation rate is more than four per cent and is nearing RBI tolerance level of 5 per cent for the current fiscal.

The income tax rate cut will certainly boost the economy and from the low to high will be able to provide anywhere between Rs.4000 – 44000 to every income tax payee. This will give more money in the hands of the consumers and will boost consumption. The reduction of Cenvat (Central Value Added Tax) will make things cheaper, thus making the rupee go further.

The removal of excise duty on refrigerating equipments, will help in lowering the cost of cold storage infrastructure, which is the need of the hour for the growing economy.

The commodity transaction tax (CTT) similar to that of securities transaction tax (STT) has been introduced to keep the speculators at bay from the commodities market. Apart from the 12% service tax, a new exchange levy of 6% and another Rs.17 for every Rs.100,000 will add to the cost of trading in commodities.

Bird flu update - vigil required

Though there are no new reports of bird flu in India, Bangladesh is in the grip of bird flu more severely than earlier thought.

The United Nations has praised the efforts and measures taken by Government of India to control the worst ever bird flu outbreak in India. It has also urged India to maintain vigil as there is virus in the area.

The intensive culling of backyard poultry has helped in stopping the spread of the disease. But intensive surveillance in high-risk areas is required as the possibility of new occurrences remains high in the belt. Though disinfection has been done, it should be continued as the virus can be re-introduced the report from UN said.

Some pointers to the poultry farmers

1. Keep poultry flock isolated from outside environments.
2. Prevent flocks from contacting wild birds and keep them away from water sources that might be contaminated by wild birds.
3. Allow only essential workers and vehicles to enter the farm and poultry houses.
4. Provide clean protective clothing, equipment, and disinfection facilities for workers.
5. Thoroughly clean and disinfect equipment and vehicles entering and leaving the farm. Include tires and undercarriage.
a. Use detergents and disinfectants (avian influenza viruses are sensitive to most).
b. Use disinfectants that are labelled as effective against influenza viruses.
c. Use heating and drying (which inactivate the viruses).
6. Do not borrow equipment or vehicles from other farms and do not lend yours.
7. Avoid visiting other poultry farms.
8. If you do visit another farm or a live-bird market, change footwear and clothing before contacting your own flock again.
9. Do not bring birds from slaughter channels (especially live-bird markets) back to the farm.
10. Don’t wait to report sick birds! Early detection of avian influenza is essential to prevent its spread.

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