Commodity prices move up, drought spreads

Commodity prices move up, drought spreads

Maize prices in India were down 2% on an average at the market yards (Pan India basis) to Rs.9300 per MT range. Prices are higher than last year by 6.2%. Average prices for Aug 2009 were Rs.9247 per MT, 3.7% higher than last year (Aug 2008) and 4.5% higher than last month (July 2009). Prices in Andhra at the market yard wee down slightly, but delivery prices are much higher. Prices in Rajasthan were also down by 0.6% to Rs.10300 per MT at the market yard. Prices in Gujarat, Tamil nadu and Uttar Pradesh moved up by 5.6%, 2.5% and 2.9% to Rs.10600 (range 9500-11700), Rs.9100 and Rs.9450 per MT at the market yard. Reports indicate that some corn was purchased in Gujarat at Rs.10300 per MT delivered at a feed mill, which is a fair value.

On the futures market the prices moved lower by 2-4% for the two contracts that are currently available, Sept delivery Rs.9750 per MT, down 2%, Oct delivery Rs.9280 per MT, down 4.17%. In the spot market though the prices have moved up by about 1%. Nizamabad RS.9450 range, up 0.5%, Karimnagar Rs.9269, up 1% and Davangere, Rs.8561, up 0.75%.

Pearl Millet prices moved up by about 1% toRs.9050 per MT. Prices are higher than last year by 16.2%. The average August 2009 prices is Rs.9036, 18% higher than last year (Aug 2008) and 1.9% higher than last month (July 2009). Against maize, the prices are lower by 3%.

Sorghum prices moved up by 3.5% to Rs.13584 per MT at the market yard. Prices are 14.2% higher than last year. Average Aug 2009 prices was 13,3003 per MT, 21.8% higher than last year (Aug 2008) and 11% higher than last month (Jul 2009). Against maize, the prices are higher by 31.4%.

Barley prices moved lower by 2.7% to Rs.8250 per MT. Prices were lower than last year by 20.7%. The average prices of barley for Aug 2009 is Rs.8259, 19.47% lower than last year (Aug 2008) and 4.5% higher than last month (Jul 2009).

In the futures as well as the spot markets, the prices moved lower. Sept delivery, down by 4.36% to Rs.9000 range, while Oct delivery down by 4.77% to Rs.9170 per MT. Dec delivery was down by 6.5% to Rs.9270 per MT. The spot market (Jaipur), prices were down by 0.3% to Rs.8606 per MT.

As on Aug 27, 2009, GOI has declared 278 districts as drought affected. Only 3% of the area as per IMD has received excess rainfall, while 25% has received normal rainfall. About 70% of the area has received deficient rainfall, and 2% has received scant rainfall. For the period Jun 1 – Aug 26, 2009, the rainfall deficiency is still 25%, Norwest India -25%, Central India – 20%, South Penninsula -14% and North East -25%.

Food grain production as per the figures available from GOI will be lower by 15-20%, GOI has also removed the 5% export incentive on corn exports under Vishesh Krishi Upaj and Gram Udyog Yojana (VKUGUY), which would possibly assist is stabilizing the prices in India and increase availability locally.

On CBOT, corn prices were down marginally. Sept $125.97 per MT, down 0.35% against last week, Dec down 1.21% to $128 per MT. Mar 2010 corn was up 0.88% to $134.63 per MT. FOB gulf value was similar to last week at $160/163 per MT for Sept – Nov delivery. Sorghum price at the same point were close to corn at $159/160 per MT.

DDGS prices on FOB basis (gulf) have risen sharply to $131 Sept to $144 for Nov delivery. CNF prices (SEA region) were close to $185-190 per MT. There is a huge supply of DDGS from US, approximately 30 MMT and the local demand as well as foreign demand is also up as the product currently is selling cheaper than corn in most markets. With 26-27% protein it is possibly a cheapest source of protein available and added on that is the 9-10% oil as an energy source makes it a good buy for use as feed ingredient.

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

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

Coarse Cereals prices up on monsoon deficiency; WASDE Report out – predicts a higher corn production

Coarse Cereals prices up

Maize prices moved up by 2.4% in the market yard to Rs.9200 per MT on pan India average this week. Prices were about 1.6% higher than last year. Prices remained stable in Karnataka, Andhra Pradesh and Maharashtra at Rs.9290, Rs.8400 and Rs.9150 per MT, but were reported higher Rajasthan and Uttar Pradesh by 9% and 6% to Rs.10540 and Rs.9192 respectively.

In the futures market as well, except for near month delivery (Aug), where prices were down by about 2% to Rs.9400 per MT from last weeks Rs.9600 per MT, prices moved up for Sept, Rs.9990, up 1.1% and Oct Rs.9590, up 1.48%. In the spot market while prices in Davangere (Karnataka) and Karimnagar were somewhat stable, at Rs.8500 per MT and Rs.8889 per MT respectively, prices moved up by 1.58% in Nizamabad to Rs.9350 per MT.

Pearl Millet (Bajra) prices moved down slightly by 1.3% to Rs.9000 per MT, but prices were higher than last year by 15.5%. The prices are lower than maize by 2%.

Sorghum (Jowar) prices moved up by 6.8% against last week to Rs.13685 per MT. Prices were higher than last year by 20.5% and against maize by 33%.

Barley prices moved up by 3.5% to Rs.8300 per MT, but were lower than last year by 20.4%. In the futures market the prices were lower than last week by 1 – 1.64% to Rs.9570 per MT for Sept and Rs.9794 per MT for Oct delivery. Prices for Dec delivery moved up by 5.2% to Rs.10100 per MT. Prices in the spot market Jaipur were about stable at Rs.8650 per MT range.

On CBOT, prices for Sept moved lower by 1.12% to $125.18 per MT, while prices for Dec and Mar 2010 were up by 0.25% and 1.17% to $128.81 per Mt and $135.97 per MT respectively.

FOB values Gulf and PNW remained stable at $159/161 per MT and $174/182 per Mt respectively for Aug – Oct period. FOB Gulf rates for Sorghum were indicated at $155 per MT.

For the time being DDGS prices for Sept were indicated higher at $195/197 per MT CNF SEA region. For Oct the prices are indicated higher at $205 per MT. FOB gulf prices for DDGS $124 per MT for Sept and $135 per Mt for Oct delivery.

Freight rates were little lower for Gulf-Japan to $56 per MT and $29 per MT for PNW-Japan. Freight rates for Argentina/Brazil – China were about $41-42 per MT, down by about $1 per Mt against last week.

FOB Prices in US for Barley were stable at $200 per MT, while for Corn Gluten Meal were $20 per MT higher than last week to $610 per MT.

WASDE Report out – predicts a higher corn production

The latest WASDE report out last week indicates US corn production for 2009/10 to be 324.14 MMT, with an average productivity of 4.05 tons/acre. The overall supplies are likely to increase to 368.19 MMT and the usage in sector likely to move up due to increased supplies and lower prices.

Feed usage is expected at 134.62 MMT, while Food, Seed & Industrial usage is expected at 139.06 MMT, with corn use for ethanol expected to be 110.21 MMT (part of food, seed and industrial usage). Ending stocks in US are expected at 4119 MMT, up from last mointh's estimates of 39.37 MMT. The price expectation is $122 – 153.53 per MT.

The report also indicates the world production of corn to be 796 MMT, up from last month’s 789 MMT. While production in Mexico, FSU 12 and Ukraine is expected to be lower at 22.5 MMT, 16.82 MMT and 8.5 MMT respectively, production in USA is expected to move up by about 12 MMT from last month’s estimates.

There is still a guess on India’s corn production numbers, and with the rainfall deficiency at 59% for the period Aug 6 – 12, 2009 and overall deficiency of 25% for the period Jun 1 to Aug 12, 2009, production could be affected. In areas where the deficiency has been higher specially in Rajasthan, Uttar Pradesh, Andhra Pradesh and North Interior Karnataka the crop where there has been damage due to water stress and wilting, the damage cannot be reversed, which will affect the production of corn in there states. Rains are predicted in the second week of Aug 2009.

Amit Sachdev
India Representative

US Grains Council

Email: usgcindia@gmail.com

Commodity prices jump on monsoon deficiency; Livestock the best option to supplement farm incomes

Commodity prices jump on monsoon deficiency

Maize prices moved up at the market yard this week by 2.2% to Rs.9000 per MT. Prices were lower than last year at the market yard by 1.3%. Prices moved lower in Rajasthan, Tamil Nadu and Uttar Pradesh by 3%,1% and 4% to Rs.9650, Rs.8600 and Rs.8700 per Mt respectively. Corn prices moved up in Gujarat, Karnataka and Maharashtra by 13%, 7% and 2.6% to Rs.10770, Rs.9250 and Rs.9130 per MT respectively. Prices in Andhra Pradesh remained stable.

In the futures market maize prices moved up by 5 – 8 %. Aug delivery Rs.9600 per MT , up 4.8%; Sept Rs.9880 per MT, up 6.7%; Oct Rs.9450 per MT, up 8.7%. This could be in anticipation that he production would be lower and also harvest delayed due to late sowing. In the Spot markets the prices remained more or less stable in Nizamabad and Karimnagar in Andhra Pradesh, but moved up to Rs.8518 per MT in Davangere, adding 1.33% to the tally.

Pearl Millet prices moved down by 1% to Rs.9120, but were higher than last year by 11.8%. Against maize, prices were higher by 1.7%.

Sorghum prices also moved up by 8.6% to Rs.12820 per MT at the market yard. Prices were higher than last year by 18.6% and against maize higher by 30%.

Barley prices too moved up by 5.3% at the market yard to Rs.8000 per MT. Prices were lower than last year by 36.5%.

The futures market saw a sudden spurt in the prices adding almost 5-10% to the tally against last week. Sept Rs.9730, up 10.69%; Oct Rs.9882, up 10.53%; Dec Rs.9600 per MT, up 5.12%. At Jaipur spot market the prices were up by 4.8% to Rs.8654 per MT.

Last week was a major setback for Indian agriculture. For the period Jul 30 to Aug 5, 2009, the rain deficiency was 64%. The overall deficiency on monsoon as on Aug 5, 2009 for the period Jun 1 – Aug 5, 2009 stands at 25%. Major corn producing areas, Andhra Pradesh, Maharashtra, Chattisgarh, Uttar Pradesh, Rajasthan, North Interior Karnataka, Madhya Pradesh practically did not received any rainfall (def of 80 – 99%), in the crucial week. In some states like Karnataka, sowing was done only in last week of July. Of the 36 meteorological divisions, 27 divisions received deficient or scanty rainfall. In such a situation when the topsoil and subsoil moisture both are under stress and with a dry spell predicted for the next 2 days (revival after 2 days as per the press release from IMD), there is likelihood of a major productivity loss. Press reports suggest a production loss in states on Andhra Pradesh, Rajasthan and Uttar Pradesh anywhere between 20-30%. Reports are that Maharahstra has also declared drought is some districts and more districts will be added to the list.

The soybean situation is also critical and even though the total area under soybean is higher than last year by almost 3.3%, but with the dip in monsoon and almost dry conditions in Madhya Pradesh the situation may not be as good as previously thought.

Corn futures on CBOT moved lower this week. Prices were down by 3 - 5%. Sept $126.60 per MT, down 5.24%; Dec $128.49, down 3.73%; Mar 2010 $133.69, down 4.06% gainst last week prices. The FOB values for corn for US Gulf and PNW were also dwn to $158/159 per MT and $174-181 per MT respecively for the next 3 months. Sorghum was indicated at $154 per MT (FOB US Gulf), about 2.5% lower than corn. DDGS prices continued to be stable at $188/190 per MT CNF for SEA regions, FOB value (US gulf) were indicated at $129 per MT.

Freight rates have shown a slight downward trend last week to $57 per MT for US Gulf - Japan and $30 per MT for PNW- Japan. Freight rates from Argentina/Brazil to China were also reported lower at $42/43 per MT.

Barley prices in US were reported to be stable at $200 per MT (FOB US gulf) and Corn Gluten Meal prices moved up slightly to $590 per MT (FOB US Gulf).

Livestock the best option to supplement farm incomes

In these trying times, when farmers are looking skyward, hoping for a miracle, possibly livestock would be an only option provide gainful employment and returns to the farmers in India. GOI and the state governments are already geared towards this and the procurement price of milk in Pune area has been increased by Rs.2.50 per liter. The sale price of milk has also increased by Rs.2.0 per liter. Mother dairy has also increased the price of milk by Rs.1.00per liter for the consumers in Delhi, due to increase in procurement price. The increased procurement price will give an incentive to the farmer to feed the animals with balanced rations to get more milk from the animals. The deficiency is rainfall has also depleted the availability of green fodder on which some of the farmers were dependent. The deficiency in milk procurement is about 20% in Maharashtra. North India too is reeling under the same problem and the procurement as per Govt report is down by 15%.

In order to increase the returns for the buffalo farmers, GOI through NABARD has created a Rs.3 billion ($61 million) fund, which will provide interest free loans to farmers to keep male buffalo calves, which after attaining a particular weight could be sold to the large animal slaughter houses. Meat of buffalo males would then be exported. U S Grains Council had started a project in India in 1996 in collaboration with NDRI Karnal and the average weight gain obtained by feeding the males was 1.1 kg/day in a period of 8 months. The males were fed with high grain rations, containing 35% corn. Reports available suggest that farmers and enterprises will be able to avail this loan for 10 animals or more.

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

Stable prices and improvement in monsoon

Stable prices and improvement in Monsoon

Maize prices have moved up by 2.5% over last week to touch Rs.9000 per MT on the pan India average. The prices are similar to last year levels. Data shows, prices have moved up ins tates of Andhra Pradesh, 0.21% to Rs.8325 per MT; Karnataka +2.82% to Rs.8630 per MT and in Uttar Pradesh +4.36% to Rs.9040 per MT. In some states prices have moved lower, Gujarat 2.6% to Rs.9500 per MT; Maharashtra 3.6% to Rs.8900 per MT and Tamil nadu 1.3% to Rs.8685 per MT.

In the futures market prices moved lower for Aug / Sept / Oct marginally. Aug Rs9210; Sept Rs.9260; Oct Rs.8690 per MT. In the spot markets prices have remained similar to last week, expect in Davangere were prices were down by 1.4% to Rs.8406 per MT.

In the month of shravan, with people abstaining from non veg foods in parts of the country, might be one factor for lower prices in some of the consumption states. The Shravan month is observed in South India from July 20 – Aug 20 and in later in the month from Aug 23 – Sept 3, Ganesh festival will be celebrated, which will further reduce the consumption of non veg food and could be a reason for reduced demand of grains, particularly maize now. But as farmers get ready to put in stocks for Sept, demand may rise and so would the prices.

The average prices for July 2009 was Rs.8862 per MT on an average, 2.2% higher than Jun 2009 and 4.4% higher than July 2008 prices.

Pearl Millet (Bajra) prices moved lower by about 8% this week to Rs.8670 per MT, but were higher than last year by 8.8%. Prices are lower than maize by 3.8%. Average prices of Pearl Millet in July 2009 was Rs.8860, 3.1% higher than Jun 2009 and 19% higher than Jul 2008.

Sorghum (Jowar) prices moved up by about 1% to Rs.11892 at the market yard. Prices are 4.3% higher than last week and 24% higher than maize at the market yard. Average July 2009 price was Rs11978 per MT, 11% higher than Jun 2009 and 10.66% higher than Jul 2008.

Barley prices moved up slightly by 0.5% to Rs.7650 per MT, but were lower than last year by 34.5%. Average barley price for July was Rs.7900 per MT, 0.52% higher than Jun 2009 and 26% lower than July 2008.

In the futures market Barley prices have been down marginally by 0.35% for Sep – Oct in the spot market have been stable as last week at Rs.8260 per MT.

The deficiency in rainfall for the period Jun 1- Jul 29 is close to 19%, though there was some advancement of monsoon and some areas did receive rainfall in the last week, including parts of Delhi and Chandigarh. The major chunk of India the agriculture belt (18 sub-divisions) shows deficient rainfall (-20—59%) as per the report on IMD website. Latest reports indicate that farmers have sown more coarse cereals, Oilseeds and Pulses in the last week in wake of good rains in parts of India.The august rainfall will be crucial for the crops and if there is large scale deficiency, some serious measures will need to be taken by the government.

On CBOT, corn prices moved higher by 2-5%. Sept $133.61 (+5.23%); Dec $134.48 (+3.04%); Mar $139.36 (+2.53%). FOB GulF and PNW prices are indicated at $164/166 and $181/191 per MT respectively for August to October 2009 period.

Prices for Dried Distillers Grains with Solubles (DDGS), slipped lower in the US, this making it the most competitive protein/energy ingredient. Delivered prices to SEA region were indicated at $188/190, while FOB Gulf process were indicated at $127 per MT, down by $4 as of last week.
Freight rates have remained stable more or less at $62 for Gulf-Japan sector and $33 for PNW-Japan sector. Freight to China from Brazil-Argentina to China was reported to move lower at $46/147 per MT. Reports also indicate that the Brazilian corn may not be in the market (expect a few destinations) due to higher prices locally and that China also has released some 2 MMT of corn on the domestic market.

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