Coarse Grains Prices Slump; Brazilian Poultry Market and Prices

Coarse Grains Prices Slump

Maize prices slumped this week by 8% going below Rs.8000 per MT levels this week on an average at the market yard. The prices averaged Rs.7830 per MT, about 6.7% lower than the MSP announced by GOI. There are reports from Andhra Pradesh and Karnataka that GOI has stepped up purchases at the MSP level. The prices were about 14.7% higher than last year prices. The Nov average price was Rs.8137 per MT at the market yard, about 22% higher than last year.

In the future market, maize prices were up slightly by Rs.30 – 150 per Mt over last week’s close. While Dec delivery was Rs.8165 per MT, Feb delivery was Rs.8550 per MT. In the Spot markets as well, prices were up slightly in Nizamabad to Rs,8670 per Mt, but in Karimnagar and Davangere prices slumped to Rs,8506 and Rs.8585 pr MT. In Davangere prices were lower by Rs.300 per Mt over last week.

Pearl Millet (Bajra) prices also went down by 7.1% and were at Rs.7272 per MT at the market yard. The prices though are higher than last year by 4.1% for last week of Nov. Against Maize, the prices are lower by 7.7%. The average November value is Rs.7506 per Mt, similar to last month (October), but 11.4% higher than last year’s November average price at the market yard.

Sorghum (Jowar) prices slumped by 4.5% at the market yard over last week and averaged Rs.8867 per MT, Prices were 12.3% lower than last year’s prices. Against Maize, the prices are higher by 11.6%. Nov average prices were Rs.9083 per MT,, about 4.8% lower than last year.
Barley prices slumped by 1.1% to Rs.9195 per MT. prices are down by 8.5% against last year. November average price is Rs.9275 per MT, about 12% lower than last year.

In the future market the prices slumped by Rs.400 per MT over last week to Rs.10,296 per Mt for Dec delivery and Rs.10 ,888 per MT for April delivery. In the spot market too prices were down by Rs.300 per MT to 10358 per MT.

Corn prices on CBOT moved up by about 3.3% over last week for Dec / mar delivery. Dec delivery on CBOT was $137.55 per MT and Dec $143.92 per MT against $133.22 and $139.44 per MT last week.

Brazilian Poultry Market and Prices

Market reports project broiler meat production in Brazil to increase in 2009 by 5% on higher exports and domestic demand. The improved outlook for the Brazilian economy also supports higher domestic demand for animal protein in 2009. Brazil consumes about 37 kg of poultry meat per capita/annum against 45 kg per capita/annum in USA.

In 2000, Brazil farmers placed 27.5 Million broiler parents, which produced 3.2 billion broilers. The price of broiler in 2000 was $0.50 per kg and was sold at $0.68 per kg (RTC). The prices of corn and soybean meal were $0.129 and $0.18 per kg respectively.

A Sept 2008 report indicates that Brazil placed 50.52 million broiler parents and will produce 5.56 billion broilers in 2008. The RTC price of chicken was $1.27 per kg. Corn and Soymeal prices were $0.273 and 0.43 per kg. Current price of corn though is $0.145 – 0.148 per kg against $0.186 per kg price in India. Soymeal price in India currently is $0.30 per kg at the feed mill.

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

Coarse grains prices move up slightly; GSM credit program from USDA

Coarse grains prices move up slightly

Maize prices moved up by about 6% against last week, averaging Rs.8500 per MT at the market yard. The prices were about 21% higher than last week and also were about Rs.100 above the Minimum Support Price of Rs.8400 announced by GOI.

The future prices of maize on NCDEX were up slightly against last week. SPOT prices were stable/similar to last week at all locations but at Davangere the prices were reported to be up by 1.5% to Rs.8800 per MT.

Pearl Millet (Bajra), prices remained stable at about Rs.7800 per MT, but were up by about 12% higher than last year’s prices. The prices for pearl Millet were about 8.8% lower than maize prices at the market yard.

Sorghum (Jowar) prices added 2.2% to the tally, moving to Rs.9290 per MT. The prices were only 2.6% higher than last year’s prices. Against maize the prices are about 8.3% higher at the market yard.

Barley prices have also moved up this week, adding 2.3% (Rs.300) to the tally. Barley was offered at the market yard at Rs.9300 per MT. The price remains 9.5% lower than last year’s prices. In the Spot market at Jaipur, prices were reported to be about 2.2% lower over last week to 10,650 per MT.

Corn prices on CBOT crashed by about 11% this week against last week values. Dec corn was traded at $133.22, while March corn at $ 139.44. One of the reasons attributed to the lower prices is a general erosion of demand of corn as cheap feed wheat from the Black Sea Region and Western Europe becomes available in the international markets. The lower prices from US will also put pressure on Indian corn exports.

Malting Barley prices in US in Great falls and Minneapolis were $198.8 and $215.29 per MT. There are reports that Saudi Arabia will reduce import subsidies on barley imports due to declining world prices. Saudi Arabia uses imported barley to feed animals, especially sheep, goat and camels, which are with the Bedouins (farmers). Western Australia is all set to produce a barley crop of 2.5 MMT, which is second only to the 2003-04 crop, but lower than had been expected in September.

GSM credit program from USDA

The United States Department of Agriculture (USDA) recently announced $3.5 billion in credit guarantees for the 2009 fiscal year. In these times of crisis when countries are facing liquidity crunch, the USDA’s Commodity Credit Corporation (CCC) administers export credit guarantees for commercial financing of U.S. agricultural exports.

The export Credit Guarantee Program (GSM-102) covers credit terms up to three years. GSM-102 underwrites credit extended by the private banking sector in the United States to approved foreign banks using letters of credit to pay for food and agricultural products sold to foreign buyers. GSM-102 mandates the overseas buyers to purchase the needed commodities from the United States.

The details about the program can be downloaded from the link below.

http://www.fas.usda.gov/excredits/english.html

CO Bank is the authorized bank in the US and details can be checked on its website.

http://www.cobank.com/

It may be noted that DDGS is a U.S. Commodity acceptable under this program.

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

Coarse grain prices down further; Report indicates growth in Dairy in India

Coarse grain prices down further

Maize prices slumped this week on slow demand from the industry and adequate supplies in the market. Pries were down by 1.7% this week to RS.8030 per MT at the market yard. The prices though were higher by 17.7% against lat year. Maize prices in the futures market were stable similar to last week’s level. In the SPOT markets though the prices were reported to be lower by 2.3% in Davangere to Rs.8920 per MT, 0.34% in Karimnagar to Rs.8680 per MT and 1.54% in Nizamabad to Rs.8690 per MT.

Pearl Millet prices were up by 10.4% against last week to Rs.7830 per MT at the market yard. Against last year, the prices were higher by 17% and against maize the prices are lower by 2.5%.
Sorghum prices remained stable at Rs.9090 per MT at the mark yard. The prices were down by about 4% against last year. Against maize, the prices were up by 11.7%.

Barley prices were down by 6% against last week, reaching Rs.9000 per MT. Against last year the prices are down by 23%. In the SPOT market though the price was up by 1.35% to 10890 per MT and in the futures also prices gained by 0.27 – 0.5% against last week for Nov – Dec delivery.

Exports of maize are slow, even after the 5% incentive (on FOB value) and the prices at the market yard reaching 5% lower than the Minimum Support Price (MSP) set by the government.

CNF prices of corn to Asia have dropped considerably and this has also affected exports from India. Apart from the drop in commodity prices in US, the bulk freight rates to Asia have dropped considerably. The benchmark US Gulf-Japan rate was quoted at $29 per MT, lower than the Sept 2003 level. The PNW-Japan freight was quoted at $19 per MT.

On CBOT corn pries moved up slightly. For Dec delivery, corn closed at $149.67 per MT, about $1.89 per MT higher than last week’s close. For Mar delivery as well the prices were $1.42 per MT higher than last week at $156.29. FOB valued for corn US Gulf were close to $169 – 172 per MT.

Dried Distiller Grains with Solubles (DDGS) prices continue to slide in the US. Current delivery prices to South East Asia are about $220 – 230 per MT.

Report indicates growth in Dairy in India

Food and Agriculture Policy Research Institute (IFPRI) in its world report on dairy has estimated than milk production in India will grow by 2.28% per annum from 101.6 MMT in 2007 to reach 120.20 by 2015. In 2007, cow milk constituted 42% (42.796 MMT) of the total milk and in 2015, cow milk will constitute only 38.9% (46.75 MMT) of the milk and cow milk production will grow at 1.15% per annum. Buffalo milk, which constitutes 58% (58.811 MMT) of the total milk production currently, will contribute 61.1% (73.456 MMT) of the milk in 2015 and buffalo milk production is estimated to grow at 3.11%.

Fluid milk consumption is estimated to grow at 3.28% per annum to reach 54.959 MMT by 2015 from 43.422 MMT. Currently 42.8% of the milk is consumed as fluid milk and by 2015 this will be 45.72% of the total milk production in India. Use of milk for manufacturing/value addition will grow by 1.54% per annum by 2015 to reach 65.2 MMT (54%).

The average milk production of animals in India is estimated to go up from current 1123 liters to 1161 liters per annum.

Amit Sachdev
India Representative
US Grains Council
bluecross303@gmail.com

Coarse Grain prices Crash; Freight rates to go down further

Coarse Grain prices Crash

Following low demand and lower export possibilities from India, maize prices this week were down by 4.8% against last week. Prices averaged Rs.8170 per MT at the market yard, about 2.7% lower than the Minimum Support Price (MSP) announced by GOI. The prices were about 19% higher than last year at the same time.

In the futures as well as the spot markets, maize lost ground. In the futures market prices across the board were down against last week and reported to be lower than the MSP. For the near contract (NOV), prices were down by 2.6%. In the Spot markets of Nizamabad and Karimnagar maize prices slipped below Rs.9000 per MT level. While in Nizamabad prices slipped by about 3.1% against last week to Rs.8830 per MT, prices in Karimnagar were down by 3.6% to Rs.8700 per MT and in Davangere about 3.4% to Rs.9131 per MT.

Pearl Millet (Bajra) prices also slumped by 7.4% this week to Rs.7100 per MT, about 15.5% lower than the MSP. The prices are however higher than last year’s prices by 8.4% and 15% lower than Maize at the market yard.

Sorghum (Jowar) prices also crashed by about 10% this week to Rs.9090 per MT. The prices are about 7% lower than last years sorghum prices. The prices are about 10% higher than maize.
Barley prices showed some recovery and were up by 3.7% against last week to Rs.9600 per MT. but against last year the prices were down by 13.3%.

On Thursday, corn on CBOT closed at $148 per MT, close to Oct 25 close and losing 6.3% over Last Friday’s close. CBOT on Friday close at $147.7 per MT, about 6.5% lower over last week for Dec delivery. Mar delivery was also down by 6.1% to $154.87 per MT. With these prices and freights much lower, US corn though is much cheaper, but there is cheaper corn and other feed ingredient (feed wheat) originating from Black Sea region, which could be delivered to SEA region for less than $170. In addition, Brazilian corn is being sold in the market at $205 (CNF) SEA region. This could be another reason attributed to lower corn exports from India this year.

Traders await the WASDE report on Monday. Pre-report projections for U.S. corn production are for 306.47 MMT compared to USDA’s revised October estimate of 305.63 MMT. U.S. corn ending stocks were estimated at 30.22 MMT compared to USDA’s revised October estimate of 27.63 MMT. Domestic feed and industrial usage is also expected to be cut in Monday’s report, due to a potential slow down in ethanol production. Vera Sun, one of this country’s largest ethanol companies filed for bankruptcy protection this week (14 plants in 8 states).

Freight rates to go down further

Reports indicate that the Baltic Dry Index which measures shipping costs in commodities is down by 93% to 829 points from it peak in May 2008. In five months an industry that had insufficient capacity now has idle ships.

Reports indicate that at least 20% of the vessels that haul coat and ore are now at port awaiting cargoes. Steel makers have cut output and there is a credit squeeze, which has also hot deliveries.

The crude oil prices correction to less than $63 per barrel has also brought down the freight rates from India to US and Europe by about 35%. Now one can ship a 20 foot container (TEU) for $700 to Europe and $1600 to US.

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

Maize Sorghum prices up, Bajra tumbles; USDA revises production estimates; Ethanol Production and usage in USA

Maize Sorghum prices up, Bajra tumbles

Maize prices moved up over last week by 6.5% to average at Rs.8585 per MT at the market yard. One of the reasons is the lower delivery this week due to the festival week (Diwali, the festival of lights was celebrated this week all over the country).. The price of maize was about 22.8% higher than last year at the end of the October. Average price for October 2008 was averaged at Rs.8228 per MT, higher by 25.6% over last year’s October average. The price though is about 3.25% lower than Sept 2008 average. The delivered prices were noted at Rs.10,500 per MT at some locations.

In the futures market, maize was up by about Rs.200 per MT over last week to Rs.8600 levels for Nov 2008 delivery, Also it added Rs.100 to reach Rs.8360 per MT for Dec delivery and remained similar at the last weeks level for Jan/Feb deliveries. In the spot markets, Maize was up by about Rs.100 per MT in Nizamabad over last week to Rs.9100 and lsot Rs.100 per Mt to level at Rs.9460 per Mt at Davangere. In Karimnagar the value was stable at Rs.9040 per MT.

Industry estimates and working done based in discussions with end user associations, seed companies suggest that by 2020 the requirement of the end users (Poultry, starch, livestock feed, food and brewery etc) will be about 30.73 MMT. This is without taking into consideration any exports. The growth in demand is expected to increase by 5-6%, while the production may increase by 4-5%. In 2007/08 the supply increased by 27.88% over 2006/07, which was abnormal. It may be touch and go every year as the demand is likely to pick up much faster.

Pearl Millet (Bajra) prices were down this week by 3.7% to average at 7670 per MT at the market yard. The price is about 20% higher than last year value. The prices are lower than maize by 12%. The average price for October 2008 was Rs.7502 per M, about 17.5% higher than Octber 2007 avearge.

Sorghum (Jowar) prices were up this week by 8.7% against last week, to average at Rs.10102 per MT, about 5.6% higher than last year. The price was also higher than maize by 15%. The October 2008 average was Rs.9559 per MT, about 3.7% higher than October 2007 average.

Barley prices have remained stable and delivered prices to the malt companies in Haryana are seen at Rs.11,500 MT. Nov/Dec delivery was reported at Rs10,900 per MT and in the SPOT market at Jaipur the price was quoted at Rs.10,800 per MT.

In the US, corn on CBOT was up for Dec 2008 and Mar 2009 deliveries by 7.8% over last week’s close to reach $158.02 and $165.03 per MT levels. With freight rates at the lowest, US corn would be a cheapest buy in South East Asia and Middle East markets.

USDA revises production estimates

United States Department of Agriculture on Oct 28, 2008 released a corrected U.S. Crop Production report. USDA is now projecting the 2008/2009 corn harvest at 305.5 MMT. Feed and residual use is projected at 134.6 MMT about 8.7% lower than the Oct 10 forecast. Corn exports are forecast at 49 MMT in the new report. USDA has revised the report for the first time and the area under corn (sown and harvested) has been brought down by 1 million acres and the national average yield has also been trimmed by 3.90 tons/acre.

While the forecast for export of corn has been reduced, there is likely hood that more and more countries import more of DDGS to fulfill the needs of energy and protein in the rations. Already China and Taiwan have started scouting for better deals for DDGS. Other countries who will increase DDGS usage are Vietnam and Indonesia.

Ethanol Production and usage in USA

The Renewable Fuels Standard (RFS) mandates use of 56.7 billion liters of ethanol by 2015. The mandate also states that all of gasoline produced in US will be blended with 10% ethanol by 2015.

In 2008, U.S. is estimated to use 521 billion liters of gasoline (down from 536 billion liters in 2007) and approximately 34 billion liters of U.S.-produced ethanol plus another 3 billion liters of imported ethanol. Since February 2008, the price of ethanol has been less than the price of gasoline. U.S. Environmental Protection Agency (EPA) regulations allow blended fuel to contain up to 10% ethanol. California regulations allow up to 5.7% blends.

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