Lower maize prices can keep a check on inflation; Milk is a superior food, but not a luxury food

Lower maize prices can keep a check on inflation

Maize prices dropped by 2.1% to Rs.8864 per MT at the market yard on average. The prices is for the loose material brought by the farmers to the market yard. The prices were higher than last year by 6.2%. Stocks arrivals in the market are keeping a check on the prices. The average prices in some states however were reported up, Andhra Pradesh up by 0.45% to Rs.8441 per MT; Gujarat up 7.2% to Rs.9916 per MT; Karnataka up 1.38%, Tamil Nadu up 1.68% to Rs.8950 per MT. However prices were reported lower in Rajasthan 3.77% to Rs.9430 per Mt and Uttar Pradesh 3.35% to Rs.9600 per MT.

In the futures market (NCDEX), the prices for Apr delivery remained stable as last week at Rs.8490 per MT, while for May and June the prices dropped to Rs.8910 and Rs.9135 per MT, down by 0.44% and 0.60% respectively. However the prices for July delivery were higher by 0.42% to Rs.9370 per MT. In the spot market the prices moved higher. Nizamabad up by 2.6% to Rs.8713 per MT, Karimnagar up by 5.6% to Rs.9128 per MT and Davangere up by 0.2% to Rs.9039 per MT.

Pearl Millet prices moved up by 11.9% to Rs.10476 per MT, remained higher than last year by 15.9% and also higher than maize by 15.4%. 

Sorghum prices moved up by 2.8% to Rs.12250 per MT, higher than last year by 23.5% and higher than maize by 27.7%. 

Barley prices moved down by 1.6% to Rs.8102 per MT, but were higher than last year by 1.6%. In the futures market as well prices have fallen as new stocks have started to arrive. Apr down 4.18% to Rs.9610 per MT; May down 4.5% to Rs.9774 per MT; Jun down 4.18% to Rs.9930 per MT and Jul down 1.96%to Rs.10010 per MT. The the Spot market (Jaipur) however the prices were reported yp be higher than last week by 1.16% to Rs.9220 per MT.

On CBOT there is no major change in the prices, which were report at 1.04% higher for May at $137.23 per MT, 1.18% for Jul at $141.80 per MT and 1.32% higher for Sept contract at $145.82 per MT. The FOB values for Gulf and PNW have remained stable at $157-163 per MT and %179-184 per Mt for the period Apr - Jul. Sorghum price on FOB basis (Gulf) has remained stable at $167-168 per MT for the same period.

The DDGS have suddenly spiked due to increased demand from China and other Asian destination have followed China and increased purchases. FOB Gulf value of DDGS is $166 for Apr; $156 for May and $146 for Jun. CNF value for SEA region (vietnam) is indicated at $249-254 per MT and for China at $245-250 per MT for the same period. The price of DDGS, relative to corn is lower in Southern China and this has lead to increased buying. As container prices are higher, bulk shipments have also increased and hence increased buying.

There are reports that Chinese government will release corn in the open market, which will help stem  the increase in corn price in China, but the demand of DDGS is expected to remain strong in coming years. In addition US is expected to produce more DDGS when the E 15 (15% ethanol blend) is made mandatory in the US. 

As the Argentine dock workers strike has come to an end and South American exports surge, the freight rates have moved up. Gulf-Japan benchmark was up $3 per Mt to $70 per MT, while PNW-Japan benchmark was up $2 to $42 per MT. Argentina/Brazil - China freight rates were reported higher at $74-76 per MT.

Milk is a superior food, but not a luxury food

The recent National Sample Survey Organization (NSSO) data reveals that Indian's consume more milk and almost 15% of the monthly income on milk and milk products. And the spend increases with the increase in income. In rural India, almost 14.9% income is spent on milk and 18.3% in Urban India and in both cases it is second to cereals, which for the basic diet of Indian families.

As the demand has increased and supplies affected due to increased summer (lower production), agencies have increased the procurement price (in tune with the increased cost of production), but at the same time have increased the sale price. Nandini milk from Karnataka Milk Federation increased the prices this week, Mother dairy and AMUL had increased the prices in National Capital Region (NCR) last week.

Amit Sachdev

India Representative

U S Grains Council

Email: usgcindia@gmail.com