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
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
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