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.
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
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