Commodity prices up, drought effects livestock

Commodity Prices up, Drought effects livestock

Maize prices moved up by 3.6% this week to reach Rs.9500 per MT levels pan India average. Prices are 7.6% higher than last year. Prices were stable in Gujarat (Rs.10000), Karnataka (Rs.9200), Maharashtra (RS.9100), Rajasthan (Rs.10,300), and Uttar Pradesh (Rs.9200). However prices moved up in Andhra Pradesh by 1.7% to Rs.8500 per MT and Tamil Nadu by 4.1% to Rs.8900 per MT. The above prices were at the market yard (mandi) level for loose stocks and additional costs for packing, tax and transport etc will be incurred.

In the futures market (NCDEX), while prices of Corn for Sept remained stable at Rs.9960 per MT, Oct delivery was up by 1% to Rs.9680 per MT. Spot markets in Karimnagar and Nizamabad saw an increase of 3,2% and 0.7% to Rs.9179 and Rs.9413 per MT respectively, while Davangere was stable at Rs.Rs.8500 per MT.

Pearl Millet prices remained stable at Rs.8900 range this week at the mandi, but were higher than last year by 17.7%. Prices wee 6.2% lower than maize.

Sorghum prices were down by 4.1% to Rs.13120 per MT at the market yard levels. Prices are higher than last year by 18.2% and higher than maize by 27.5%.

Barley prices moved up by about 2% this week to Rs.8450 per MT at the market yard. Prices were lower than last year by 19.6%.

In the futures market, barley prices moved lower by about 2%, Spet Rs.9430 per MT, down 1.5%, Oct Rs.9630 per MT, down 1.7% and Dec Rs.9910 per MT, down 1.9%. Spot market, Jaipur prices were stable at Rs.8632 per MT.Drought conditions prevail in the country and of the 626 districts for which reports are now available 246 have been declared drought hit. GOI has increased the Minimum Support Prices of Paddy by Rs.1000 per MT and Pulses by Rs.1000 – 3000 per MT, so as farmers will sell these to the GOI organizations. MSP for all other commodities is frozen at last year’s levels.

The drought affected areas are in 10 states. Looking at the last week’s rainfall (until Aug 19), the areas of East India, South Penninsula and Central part received good rainfall and the overall deficit was only 2%. The western part of the country did not receive much rainfall this week. The overall deficiency is 26% and in the corn areas of UP (-40%), Corn/Soy belts of Madhya Pradesh (-29 to -37%), Areas of Ryalseema, Telangana, Marathwada (-30 to -60%). Situation has improved in North Interior Karnataka, which now has received more rainfall and the deficit is reduced (-17%). If the rainfall continues that way it has, it will help the standing crop. Good rainfall is predicted for the month and this will enhance soil moisture conditions in the agri zones and farmers may be able to take an early rabi (Winter crop).

Drought is starting to take its toll is many areas, where farmers have started feeding the standing crop to animals as no grain is expected from these areas. Press reports indicated farmers have also started to sell their animals as they are unable to feed the same. These may not be true in areas where irrigation facilities exists and farmers have other means to feed the animals, but there are areas which are parched and feed ingredients, pasture land is a luxury. Price of dry fodder is also going up in some areas as there is a short supply. Milk production is getting effected and the overall take home is much lower.

Nepal is also facing drought like conditions and the Nepalase government has requested India to allow wheat and Rice exports to Nepal (450,000 MT). There is a ban on wheat and non basmati rice as on date. Nepal fulfills its need for maize also from India and this year, with the drought conditions, the maize crop is expected to be lower by 15% in Nepal and the pressure is going to be on India.

Price of corn on CBOT was slightly higher this week, Sept 126.37 per MT, up 1%, Dec $129.59, up 0.6%. Mar delivery was lower by about 1.85% to $133.45 per MT. FOB gulf prices moved slightly up to $160/162 per Mt for the period Sept/Nov, also FOB PNW was higher slightly to $177/183 per MT for the same period.

DDGS demand is strong domestically as currently it is priced lower than corn. CIF prices to SEA region are indicated at $180 – 190 per MT for Oct – Nov. lat week the prices were $205 per MT for October. FOB Gulf prices are down to $124 per MT, which could be the bottom. Corn gluten meal, a corn co product is priced at $590 (FOB Gulf).

Freight markets are also moving lower and Gulf-Japan is indicated at $53, while PNW-Japan is indicated at $28 per MT. Argentina/Brazil – China is indicated at $38-39 per MT.

Amit Sachdev
India Representative
U S Grains Council
E mail: usgcindia@gmail.com