Commodity price up across the board; Release of conservation acres in US will help stabilize prices

Commodity price up across the board

Maize prices moved up by about 2% this week at the market yard reaching Rs.7340 per MT. Prices were about 4.3% higher than last year prices. Average price for the month of May was Rs.7300, about 4.3% higher than May 2007 prices at the market yard. End users are finding it difficult to cover stocks.

Pearl Millet (bajra) prices remained stable at about Rs.6950 per MT, but were 9% higher than the prices last year. The average for the month of may 2008 was Rs.7250 per MT against Rs.6850 per MT in May 2007, an increase of 5.8%. Pearl Millet prices were about 5.6% lower than maize prices.

Sorghum (Jowar) prices moved up by 1.5% at Rs.9860 per MT and were 4.8% higher than last year prices. Monthly average for May 2008 was Rs.10285 per MT, against Rs.9000 per MT in May 2007, an increase of 14.3%. Against maize the sorghum prices were higher by 25.6%.

Barley prices jumped about 8% this week to reach Rs.11,000 per MT at the market yard (in loose). The prices are running about 39% higher than last year. Month average for may 2008 was Rs.10380 per MT against Rs.6865 per MT, an increase of 51% over May 2007.
Even though GOI has predicted the agricultural growth of 3.5% for the year 2007/08, which has led to GDP growth of 9%, the high rate of inflation at 8.1% on week ending May 17, 2008 is negating all the effects of high growth.

Corn prices on CBOT remained stable at $239.9 and $ 214 per MT for July and Sept delivery.

Release of conservation acres in US will help stabilize prices

US has about 34.7 million acres of land enrolled in the Conservation Reserve Program (CRP). U.S. Department of Agriculture (USDA) has indicated that the government would open up 24 million conservation acres (69%) for grazing, a new tool the government is using to ease costs for livestock raisers.

Conservation Reserve Program (CRP) land could be used for hay or forage after the primary nesting season for grass-nesting birds has finished, which typically happens in late July and early August. This will help relieve stress on the cattle producers and keep the feed prices stable.

The 24 million acres translates to 18 MMT of forage worth $1.2 billion. This will significantly increase the amount of feed available to the livestock sector in USA.

USDA report indicated that US will produce 308 MMT of corn in 2008/09 and only 134.63 MMT will be used for feed and residual purposes in 2008/09 against 156.22 MMT estimated use in 2007/08, down by 13.82%. One of the major reasons of this change is high corn price in US and also availability of Dried Distillers Grains with Solubles (DDGS), which is replacing part of the corn in livestock diets.

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

Delivery prices of maize up on high demand and lower supplies; USGC provides inputs to end users on Futures and Hedging

Delivery prices of maize up on high demand and lower supplies

Maize prices at the mandi level were stable this week at about Rs.7200 per MT on an average for loose material (Pan India basis), but prices in Karnataka, Maharahstra have shown an upward trend as per reports received. End users are experiencing problems at the delivery end. Prices in Bangalore were reported at Rs.9000 per MT delivered on Friday and deliveries were not there. The delivered prices at one of the locations has been reported up from Rs.8500 per MT to Rs.8900 per MT over one week, an increase of over Rs.400 in 6 day period.

If reports are to be believed, exports of maize are to the tune of 3.0 MMT for the 2007/08 crop and can be higher, if US prices remain high and the spread between Indian maize delivered to SEA region is high. Current prices for Indian maize delivered to Malaysia are in the range of $275 – 285 per MT, while US corn is delivered to Malaysia at $370 per MT.

Pearl Millet (Bajra) prices are down this week to Rs.7000 per MT on an average for loose material at the market yard. The prices are however higher than last year by 3.5%. Against maize the prices are 3% lower. Reports indicate good arrivals in Rajasthan and Haryana.

Sorghum (Jowar) prices were down this week by 14.7% over last week, and averaged Rs.9700 per MT at the market yard. Higher supplies in Maharashtra are the reason for the decrease in prices. The prices are 26% higher than corn.

Barley prices were stable at Rs.10200 per MT at the market yard and were 33% higher than last year prices at the market yard. Reports indicate consolidation in the market for exports of barley to Middle east, due to high demand in the region for feeding. Local demand by the malt companies is also high.

Corn planting is US is up, and as per reports of May 18, 2008 73% corn has been planted against 88% last year. Sorghum planting is 38% against 39% last year, Barley similar to last year at 92%, while Soybean at 27% against 52% last year at the same time.

Prices of CBOT were little lower, Jul delivery at $236.11 and Sept at $ 241.23 per MT. FOB price US Gulf for June – sept ranges from $246 – 258 per MT, FOB PNW for July – Sept ranges from $289 – 300 per MT.

USGC provides inputs to end users on Futures and Hedging

US Grains Council recently worked with end users in Ahmedabad, Bombay and Bangalore and provided them with inputs on Futures and Hedging mechanism and how the system works.

In a situation when the farmers need to discover the price and end users need a mechanism to hedge their risks, the business in so small that it can not be used in India.

Currently he Indian end users end up buying at a flat price over a period and sell the end product over a period. The endusers are unable to get the price for future supplies, over a three month lag and are unable to hedge the risk as the deliveries are not confirmed.

The future markets should be more vibrant and there should be liquidity which will help the farmers in price discovery and the end users in hedging the risks.

An article which appeared in The week (magazine) written by Mr.Abhusaleh Shariff, Senior Research Fellow at IFPRI echoes the same sentiments. The article can be assed at the following link

The Article - Ban the Ban 

Commodity prices – mixed trends; High freight costs from US benefit Indian sales

Commodity prices – mixed trends

This week maize prices were lower at Rs.7200 per MT at the market yard, down by almost 2.6% over previous week. The prices though were higher than last year by 2.8%. Delivered prices in Gujarat were Rs.8400 per MT while in Hyderabad the delivered prices were close to Rs.7900 – 8000 per MT.

Pearl Millet (bajra) prices were also down in the market yard by 5% to Rs.7330 per MT on good deliveries in Rajasthan, UP and Gujarat. The pries were higher than last year by 10% and against maize the prices were higher by 1.5%.

Sorghum (Jowar) prices move up by 12% over last week to Rs.11390 per MT. The prices were higher than last year by 24%. Against maize the prices were higher by about 37%.

Barley prices remained stable this week to Rs.10190 per MT, but were higher than last year by 32.5%. Reports indicate that some exports from the new crop are being done for Middle East.
Inflation is up to 7.83% on y-o-y basis for the week ending May 03, 2008, primarily due to increase in prices of fruits, vegetables, fuel and food articles.

Corn on CBOT was $232 per MT for July and 237 for Sept shipments. FOB values for US Corn (Gulf) were ranging from $240 – 254 per MT for May to Aug. FOB values for PNW are $282 - $295 for Jun – August shipments.

In the US corn planting is much slower than anticipated due to wet weather. As on May 11, corn plating was 51% complete against 71% last year, Soy was only 11% complete against 26% last year. The dry weather in the last two days has made it possible for improvement in the corn/soya planting.

High freight costs from US benefit Indian sales

Exports of maize from India are still going strong as FOB values to Kandla would be close to $205 per MT. Delivered price to SEA region from India would be close to $ 260 per MT.
Since Pakistan has opened imports of maize from India, there has been some movement from Andhra Pradesh, Karnataka and also Bihar.

Sea freight is at historic high, mainly due to demand and supply and high crude prices. As per analysts another factor adding to historic highs is the strike in Argentina.

U.S.Gulf to Asia (Japan/China) Panamax (55000 tons) freight was indicated at $140.00-$142.00/mt. (July-August values are closer to $131.00/tonne). Panamax rates from the PNW to Asia are indicated at $71.00-72.00/mt. With argentine strike extended to May 21, small corn and soya meal shipments are likely to shift to Indian origin and large shipments to US.

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

Commodity prices surge again; WASDE report predicts a lower corn crop in US; Dairy needs better genetics

Commodity prices surge again

Commodity prices saw a surge in prices in the first week of May 2008.

Maize prices were up by 3.5% over last week, leveling at Rs.7410 per MT at the market yard. The prices are higher than last year by 6.5%.

Pearl Millet (Bajra) prices also moved up by 4% this week, to reach Rs.7700 per MT. Prices are 10.7% higher than last week and against maize the prices are higher by 3.8%.

Sorghum (Jowar) prices have also shown an upsurge, adding 4.3% to the rally, reach Rs.10176 per Mt at the market yard. The prices are 11.3% higher than last year and about 27% higher than maize at the market yard.

Barley prices have moved up by 4.4% over last week, reaching Rs.10140 per MT at the market yard. Arrivals in Rajasthan are reported to be good. The prices are also higher than last year by about 31%.

In order to tame the inflation, GOI has banned exports of some of the major commodities like Wheat, Pulses etc, but there is no indication that corn exports will be banned as India has produced a record crop of 18.54 MMT in 2007/08.

GOI has also banned future trading in 4 commodities, but maize is not on the list, though Soya has been included in the list.

Prices on CBOT remained high. May delivery for corn on CBOT closed at $243.45 per MT, while July closed at $247.70 per MT.

WASDE report predicts a lower corn crop in US

USDA has come out with the first report for corn production for the year 2008/09 on May 09, 2008. For the marketing year 2007/08 which ends Sept. 30, USDA has lowered their estimate of corn used for ethanol production by 2.5 MMT to 76.20. For New Marketing Year 2008/09, USDA pegged beginning stocks at 35.13 MMT and 2008 production is pegged at 307.99 MMT, about 7% lower than the 332.09 MMT production of 2007/08. Usage of corn in feed has also been lowered to 134.6 MMT in 2008/09, against 156.21 MMT in 2007/08. The corn use for ethanol purposes has though been raised to 101.60 MMT. Ending stocks in US are expected to be down from 35.13 MMT to 19.38 MMT.

World corn production has been put at 777.56 MMT, down slightly from the current year, but ending stocks are projected to decline 10% to 99.03 MMT – a 25-year low - primarily due to a smaller U.S. corn crop.

Dairy needs better genetics

Over the last few years, there has been a surge in demand of milk products in India and as incomes have increased companies have geared to provide value added products for those who can afford to pay. Though the milk collections have been good and growing, Indian farmers do lag behind in using animals with high productivity.

As the commodity prices have surged, it is getting expensive to feed the animals. This has also affected the cost of production of milk and the profit for the farmer. One of the easiest way to increase the productivity is using better quality feed, though which will be more expensive, but the additional production will more than pay for the additional cost incurred.

There were a number of trials that have been done by US Grains Council in the past, which indicate that high energy feeds play a role in increasing milk production of animals and also producing high quality milk (high fat percentage).

In the long run, though it is important that farmers make use of high quality semen that can now be imported into India. The high producing offspring will be one way to reduce the cost of production.

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

Commodity prices move up; USGC provides inputs to the Poultry Processing Industry

Commodity prices move up

Maize prices have increased by 1.4% over last week to reach Rs.7160 per MT at the market yard. The prices are also higher than last year’s prices by 2.1%. the average prices of April 2008 at the market yard was Rs.7150 per MT though is lower than the April 2007 average of Rs.7241 per MT, the delivered price has increased due to increase in other costs, which has affected the income of end users.

Pearl Millet (Bajra) prices moved up by 1.8% this week to Rs.7410 per MT at the market yard. Prices were also higher than last year by 1.6%. The prices were about 3.4% higher than the maize prices. Prices for April 2008 averaged Rs.7339 per MT against Rs.7119 per MT last year.

Sorghum (Jowar) prics were down by 1.11% over last week, to Rs.9750 per MT. prices were also 5% higher than last year and 26.6% higher than maize. April 2008 prices averaged at Rs.9996 per MT against Rs.8915 per in April 2007.

Barley prices also moved up by 1.8% this week to reach Rs.9720 per MT. Prices were 26.1% higher than last year. April 2008 prices averaged Rs.9607 per MT against Rs.7346 per MT in April 2008.

Corn prices on CBOT for may and July delivery were close to $236 – 242 per MT respectively. The FOB price (US Gulf) was indicated at $253 – 260 per MT for the period May – July.

USGC provides inputs to the Poultry Processing Industry

U S Grains Council sponsored the visit of Dr.Manpreet Singh, Assistant Professor, Dept of Poultry Science, University of Auburn, to India, where he visited markets and met with the poultry processors to provide inputs to them to enhance the shelf life of poultry meat.

Dr.Singh is of the opinion that it is possible to enhance the shelf life of fresh chilled chicken from current 3 days to 10 days, with the use of antimicrobial during the process and maintaining temperature at ZERO DEG C during the process of distribution and retail. It is important to understand the science behind this and processors will need to do trials on their own on the type of organic acid (acetic/lactic) acid that can be used in the process after checking the pH of the meat.

As the new food law is implemented in the next few months, it will be important for the food companies including poultry processors to comply with the new standards, which will be based on international food standards. At the same time a campaign to educate the consumers on food safety will play an important role.

In India, there is no communication from the processor or the retailer to educate the consumer on safe food, while in other developed countries, consumer education is an important tool to keep the consumer loyal to a particular brand or a retail chain.

“Be Food Safe” is one such initiative launched by USDA, industry and consumer groups to communicate food safety information. The campaign, using the net and brochures provides information on how food safety can be compromised and what consumer must do at their end to make the food safe at their end. The brochures provide information through photographs etc on safe food handling practices. Retailers are using cooking demos, contests and seasonal promotions, among other tactics, to promote the effort.

More information can be seen at http://www.befoodsafe.org/

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