Commodity prices move up yet again
Maize pries moved up this week by another 6%, reaching Rs.8300 per MT at the market yard. The prices are about 10% higher than last year’s prices at the same time. End users are worried that ample stocks may not be for the next quarter (July – Sept). The poultry, livestock and starch sector requires about 1 MMT per month (3 MMT total for the quarter) and another 0.5 MMT till the new crop hits the market in mid October.
Delivery prices in production areas, was close to Rs.9600-9800 per MT, while in consumption areas was Rs.10500-10600 per MT. Maize futures on NCDEX, which had crossed Rs.10000 mark earlier this week for August deliveries closed at Rs.9890 per MT. Though Spot prices ruled high with Nizamabad topping the list at Rs.9150 per MT followed by Davangere at Rs.9087. earliest in the week, Nizamadad prices were Rs.9006 per MT, while Davangere prices were Rs.9123 per MT.
Pearl millet (Bajra) prices were up by 1% over last week to Rs.7200 per MT. Against maize the prices are lower by 15%, making its good product to be used in poultry rations at 5-7% levels. It is being used in Haryana, Rajasthan, Gujarat and Punjab poultry belts.
Sorghum (Jowar) were close to 10,550 per MT this week, up 4.4% over last week. Against maize, the prices were up by 22%. There are some varieties of sorghum, which are selling at par with maize or little lower than maize in Maharashtra, Karnataka and Andhra Pradesh and are being used in poultry rations, but the availability is poor and large quantities may not be available.
Barley prices in the spot market moved up by 1% to 11,460 per MT, Delivered prices were close to Rs.13500-13700 per MT. India exported 250,000 MT of barley in 207/08 and the exports started late in the season. This year, (2008/09), the exports started early (as the new crop came in) and the exports of about 200,000 MT have been completed or will be by the end of this quarter (April – June). While barley futures have more or less been stable this week, December futures have shown an increase from Rs.13770 per MT in the start of the week to Rs.14000 per MT by the end of the week.
Corn on CBOT was this week ended lower at $284 per MT for July delivery and $289.51 per Mt for Sept delivery. Reports indicate that about 4 million acres of land have been lost to flooding in the Midwest this year. And as floods recede, farmers may come out and replant. But it will be wait and watch till then.
High commodity prices, value addition and using alternates
With inflation touching a 13 year high at 11.05% and analysts expecting to to still rise, the industry will need to think of some ways to make more money, reduce costs and provide a value for money product to the consumer.
With the price of feed as it is today, cost of production of broiler is in the range of Rs.42 – 44 per kg live. With the increased cost of production, the risk is too high to be in the live market and the industry needs to make available value added affordable products.
It is a fact that when there are cost shocks in the food production system due to changes in the commodity or farm product market, food prices at retail end tend to increase and retailers will pass on the increased cost to the consumer.
As per an ERS study for the period 1987/2007 in the US the price volatility for eggs was close to 8%, and fruits and vegetables by 5-6%. On the other hand, the price volatility in processed fruits, vegetables and poultry products was less than 3%.
Which basically means that products that require more processing and packaging are usually less directly linked to changes in farm prices, while the price of less processed foods more closely follows the changes in farm prices.
One of the ways to reduce cost of production of eggs and broiler meat would be use alternate sources. The big question though would be what? In the current situation of high prices, no other grains as energy source are available, oil is too high to be used as a source of energy.
One source that can be used effectively is DDG’s – by-product of the ethanol sector, which contains 10-11% fat and 27-28% protein.
In some production areas, where alternate grains are available, farmers are using Pearl Millet (Bajra), specially in Northern India, Rice in central India and parts of Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu, where it is available. Using these commodities no doubt brings down the costs, but also reduces the efficiency of production.
Amit Sachdev
India Representative,
U S Grains Council
bluecross303@gmail.com
Maize pries moved up this week by another 6%, reaching Rs.8300 per MT at the market yard. The prices are about 10% higher than last year’s prices at the same time. End users are worried that ample stocks may not be for the next quarter (July – Sept). The poultry, livestock and starch sector requires about 1 MMT per month (3 MMT total for the quarter) and another 0.5 MMT till the new crop hits the market in mid October.
Delivery prices in production areas, was close to Rs.9600-9800 per MT, while in consumption areas was Rs.10500-10600 per MT. Maize futures on NCDEX, which had crossed Rs.10000 mark earlier this week for August deliveries closed at Rs.9890 per MT. Though Spot prices ruled high with Nizamabad topping the list at Rs.9150 per MT followed by Davangere at Rs.9087. earliest in the week, Nizamadad prices were Rs.9006 per MT, while Davangere prices were Rs.9123 per MT.
Pearl millet (Bajra) prices were up by 1% over last week to Rs.7200 per MT. Against maize the prices are lower by 15%, making its good product to be used in poultry rations at 5-7% levels. It is being used in Haryana, Rajasthan, Gujarat and Punjab poultry belts.
Sorghum (Jowar) were close to 10,550 per MT this week, up 4.4% over last week. Against maize, the prices were up by 22%. There are some varieties of sorghum, which are selling at par with maize or little lower than maize in Maharashtra, Karnataka and Andhra Pradesh and are being used in poultry rations, but the availability is poor and large quantities may not be available.
Barley prices in the spot market moved up by 1% to 11,460 per MT, Delivered prices were close to Rs.13500-13700 per MT. India exported 250,000 MT of barley in 207/08 and the exports started late in the season. This year, (2008/09), the exports started early (as the new crop came in) and the exports of about 200,000 MT have been completed or will be by the end of this quarter (April – June). While barley futures have more or less been stable this week, December futures have shown an increase from Rs.13770 per MT in the start of the week to Rs.14000 per MT by the end of the week.
Corn on CBOT was this week ended lower at $284 per MT for July delivery and $289.51 per Mt for Sept delivery. Reports indicate that about 4 million acres of land have been lost to flooding in the Midwest this year. And as floods recede, farmers may come out and replant. But it will be wait and watch till then.
High commodity prices, value addition and using alternates
With inflation touching a 13 year high at 11.05% and analysts expecting to to still rise, the industry will need to think of some ways to make more money, reduce costs and provide a value for money product to the consumer.
With the price of feed as it is today, cost of production of broiler is in the range of Rs.42 – 44 per kg live. With the increased cost of production, the risk is too high to be in the live market and the industry needs to make available value added affordable products.
It is a fact that when there are cost shocks in the food production system due to changes in the commodity or farm product market, food prices at retail end tend to increase and retailers will pass on the increased cost to the consumer.
As per an ERS study for the period 1987/2007 in the US the price volatility for eggs was close to 8%, and fruits and vegetables by 5-6%. On the other hand, the price volatility in processed fruits, vegetables and poultry products was less than 3%.
Which basically means that products that require more processing and packaging are usually less directly linked to changes in farm prices, while the price of less processed foods more closely follows the changes in farm prices.
One of the ways to reduce cost of production of eggs and broiler meat would be use alternate sources. The big question though would be what? In the current situation of high prices, no other grains as energy source are available, oil is too high to be used as a source of energy.
One source that can be used effectively is DDG’s – by-product of the ethanol sector, which contains 10-11% fat and 27-28% protein.
In some production areas, where alternate grains are available, farmers are using Pearl Millet (Bajra), specially in Northern India, Rice in central India and parts of Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu, where it is available. Using these commodities no doubt brings down the costs, but also reduces the efficiency of production.
Amit Sachdev
India Representative,
U S Grains Council
bluecross303@gmail.com
