Coarse grain prices tumble - good times for end users; India's Budget Highlights

Coarse grain prices tumble - good times for end users

Maize prices were up a tad this week on pan India bases. An increase of 0.5% to Rs.8994 per MT. Prices were however higher than last year by 9.2%. Prices were down in Andhra Pradesh by 0.6% t Rs.8565; Maharashtra to Rs.8150; Rajasthan by 0.3% Rs.9682; and Uttar Pradesh by 4% to Rs.9516 per MT. Prices were up in Gujarat by 8.5% to Rs.10075 per MT and Tamil Nadu by 2.5% to Rs.8670 per MT.

The average price for Feb 2010 was Rs.9100 per MT, 10.90% higher than last year, but 1.89% lower than Jan 2010. One reason attributed to lower prices is increased availability as Rabi crop is available in the market.

In the futures market (NCDEX), prices of maize have slumped by 2.36% for Mar 2010 to Rs.8670 per MT. Apr down by 1.49% to Rs.8880 per MT; May down by 2.70% to Rs.8980 per MT and June down by 2.09% to Rs.9250 per MT. In the spot markets as well prices are down, Nizamabad 2.46% to Rs.8569 per MT; Karimnagar to Rs.8737 per MT and Davangere down by 1.13% to Rs.8799 per MT.

Pearl Millet prices are also down by 3% to Rs.9593 per MT, but remain higher than last year by 11.7%. Prices are higher than maize by 6.2%. The average price in Feb 2010 was Rs.9759 per MT, 19.57% higher than last year (feb 2009). The average price is however lower than Jan 2010 by 2.5%.

Sorghum prices were down by 10.4% to Rs.11113 per MT, remained higher than last year by 10.1%. Prices are also higher than maize by 19.1%. Average price in Feb 2010 was Rs.11260 per MT, 12.05% higher than Feb 2009 price and only a tad (0.2%) higher than Jan 2010 price.

Barley prices moved lower by 3.2% to Rs.9245 per MT. but remained higher than last year by 8.81%. Average price for Feb 2010 was Rs.9367 per MT, 9.3% higher than Feb 2009 prices and 0.72% higher than Jan 2010 price.

On the NCDEX, barley prices were down for Apr by 0.3% to Rs.9270 per MT; May by 0.13% to Rs.9300 per MT and Jun by 1.54% to Rs.9698 per Mt. Prices were stable at Rs.10256 for Aug 2010, but moved lower in the spot market Jaipur by 0.33% to Rs.9208 per MT.

In the International market, corn prices surged and reached a six week high. Mar contract was up 5.2% to $149.20 per MT, May up 5% to $153.53 per MT and Jul up by 4.33% $157.07 per MT. The increase is prices was reflected in FOB prices. Prices on FOB basis for US Gulf were indicated at $170/177 per MT for Mar - Jun period, while FOB (PNW) were indicated at $204/207 per MT. Sorghum prices on FOB basis (US Gulf) were indicated at $182/184 per MT for May-Mar period. 

Demand for DDGS is increasing the domestic as well as the international markets. US exported about 787 TMT of DDGS in 2004 and in five years (2009) export is close to 5.52 MMT. from 2008 to 2009, exports have increased by 1.11 MMT, showing without doubt that the product is good and has been accepted in the world market as a feed ingredient of choice for making available protein and energy in the livestock rations. DDGS price on FOB basis (US Gulf) was indicated at $155 per Mt for Mar; $152 for Apr; and $146 for May. CNF prices in SEA region was indicated at $245/250 per MT.

Chinese new year has ended and the freight markets are showing a reversal and rates have increased slightly. Gulf-Japan benchmark was indicated at $65 per MT while PNW - Japan was indicated at $38 per MT.

India's Budget Highlights 

As the finance minister has put out the budget and increased the fuel prices, there are indications that it will fuel WPI based inflation marginally by 0.41% and it will also have cascading effect on other products including food products as well. Foods grains transport is exempted from payment of service tax and may help little, but not much. 

To give a boost to agriculture a four pronged strategy is suggested, which includes a second green revolution and increasing agricultural production, increasing assistance to food processing,  reducing wastage and higher credit to farmers. But as the subsidy on fertilizers have been reduced and a new nutrient based subsidy (NSB) system put in place, the price of fertilizers is likely to increase. UREA prices are expected to go up by 10%   

The budget is also expected to spur demand as income tax payers will be able to save more money and this would in turn help the economy. 

Though much has been done about agriculture, it is important to realize that the share of Agriculture in India's GDP is declining and will further decline. Share of Agriculture in India's GDP was 19% in 2005 and is close to 16% in 2009 and may be down to 12.5% by 2014 as per a report.

Amit Sachdev

India Representative

U S Grains Council

E Mail: usgcindia@gmail.com

Current maize prices down, production down too for 2009/10; US Corn production estimated higher for 2010

Current maize prices down, production down too for 2009/10; US Corn production estimated higher for 2010

Maize prices have softened across the country. Pan India average price of maize is down by 2.3% to Rs.8951 ($194) per MT. The prices are however higher than last year by 8.8%. Within the states, prices across the state markets have fallen, with Maximum drop in Gujarat by 8.22% to Rs.9278 ($201) per MT, followed by Uttar Pradesh by 4.9% to Rs.9916 ($215) per MT. Prices in Tamil Nadu are down by 3.8% to Rs.8458 ($183) per MT; Rajasthan by 3.7% to Rs.9710 ($210) per MT; Karnataka down by 0.9% to Rs.8350 ($181) per MT and in Andhra Pradesh down by 0.26% to Rs.8622 ($187) per MT. Reports are that at some market yards, prices have been lower than MSP levels as well.

Based on the 2^nd Advance estimates for food grain production in India overall coarse cereal production in 2009/10 is estimated to decline by 14.38 percent to 34.27 MMT from 40.03 MMT in 2008/09. Within the coarse cereals, maize production is estimated at 17.30 MMT, against 19.31 MMT last year, a drop of 10.41%. The prices are not following the trend as there is ample availability at present at the market yards across the country, which has put pressure on the prices offered to the farmers at the market yard.

In the futures market too the prices were down for all contracts. Mar down 2.25% to Rs.8880 ($192) per Mt; Apr down 2.4% to Rs.9015 ($195) per MT; May down 1.7% to Rs.9230 ($200) per Mt; and June down 1.51% to Rs.9445 ($205) per MT. The prices saw a similar trend in the spot markets as well, with prices down in Nizamabad by 0.74% to Rs.8786 ($190) per MT and in Davangere by 2% to Rs.8900 ($193) per MT. Prices were up slightly in Karimnagar by 0.33% to Rs.8740 ($189) per MT.

Pearl Millet (Bajra) prices have shown a marginal drop of 0.5% to Rs.9887 per MT. However, prices are higher than last year by 18.5%. Against maize the prices are higher by 9.5%.

Sorghum prices have risen by 14.4% this week at the market yard to Rs.12404 per MT. Against last year, the increase is about 19.8%. Sorghum prices are higher from maize by 27.8%.

Barley prices have also risen to Rs.9546 per MT, an increase of 10.2%. Against last year, the prices are higher by 4.9%.

In the futures market prices were down by 3.3% for Apr to Rs.9300 per MT and also for May by 3.6% to Rs.9430 per Mt. Prices were stable at Rs.9850 per MT for Jun contract and opened at Rs.10256 per Mt for August contract. In Jaipur spot market prices were down by 0.28% to Rs.9239 per MT.

On CBOT, corn prices were down slightly. Mar contract closed 0.27% lower at $141.72 per MT, May down by 0.53% to $146.21 per MT and Jul down 0.51% to $150.54 per MT. FOB prices were more or less stable at $167/169 for Gulf and $192/195 for PNW for the period Feb-May. Sorghum prices on FOB Gulf basis were indicated at $1 lower than last week at $172/177 per MT for the period Mar-May.

In its latest reports The U.S. Department of Agriculture expects that U.S. farmers to would plant 89 million acres of corn and 77 million acres of soybeans in 2010. The 2010 corn crop is projected at 335.28 MMT, slightly bigger than the 2009 crop and up from the baseline projection of 329.18 MMT. USDA projects that Ethanol production would continue to be a major driver of the corn market, with an estimated usage 114.3 MMT of corn used in 2010. This is higher than the 2009 usage and also from the baseline usage of 111.7 MMT.

DDGS prices remained stable and availability strong as new ethanol plants are coming online. FOB values for Feb were indicated at $164 per MT and down to $157 per MT for Mar and $153 for April. Delivered prices were indicated at $235/237 for China. CBOT has announced futures trade in DDGS from April 26, 2010.

The freight rates moved up slightly. Gulf-Japan benchmark was up to $63 per MT and PNW-Japan also up to $37 per MT. Freight rates from Argentina/Brazil to China also showed an uptrend and were indicated at $47/50 per MT.

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

SPOT prices see red, futures up for maize

SPOT prices see red, futures up for maize

Maize price were down by 1.5% to Rs.9160 per MT, but prices remained higher by 10.2% against last year. Prices were down in Andhra Pradesh by 0.9% to Rs.8645 per MT; Karnataka by 1.6% to Rs,8425 per MT; Maharashtra 2.7% to Rs.8400 per MT and was up in Gujarat by 3.34% to Rs.10110 per MT; Rajasthan by 4% to Rs.10083 per MT and Uttar Pradesh by 3.63% to Rs.10430 per MT.

In the futures market the prices were up for all contracts. Feb up by 1.71% to Rs.8900 per MT; Mar up by 1.73% to 9085 per MT; Apr by 1.53% to RS.9240 per MT and May by 1.51% to Rs.9390 per MT. June contact closed at Rs.9590 per MT. In the spot markets though the prices were down in Nizamabad by 0.41% to RS.8852 and o.41% in Karimnagar to Rs.8711 per MT. Prices were up in Davangere by 1.11%.

Pearl Millet prices were up by 3.3% to Rs.9938 per MT, but were higher than last leat by 19.8%. The prices are also higher than last year by 7.8%.

Sorghum prices moved up by 1.4% to Rs.1039 per MT, but are 1% lower than last year. However prices are higher than maize by 15.5%.

Barley prices were down by 13.5% to Rs.8661 per MT, but were higher than last year by 7.2%.In the futures market prices remained more or less stable but in the spot market of Jaipur prices were down by 0.37% to Rs.9265 per MT.

Corn prices on CBOT moved up for the three contracts. Mar up by 3.97% to $142.11 per MT; Mat 1.47% to $146.99 per MT and July 3.6% to $151.32 per MT. FOB prices (US Gulf) were more or less stable at $167/168 per Mt for Feb-April and FOB PNW was up to $193/198 for the period Feb-April.

USDA’s WASDE report increased U.S. corn use for ethanol by 2.54 and export by 1.143 dropping end stocks by 1.143 MMT. The world stocks were also cut by 2.15 MMT

DDGS prices on FOB basis have gone up for Feb ($163 pr MT), but down for other months to $155 (Mar) and $145 for April. CNF price to China was stable at $239 per MT.

Freight rates have dropped as the Chinese new year has started and the festivities will be on for next 15 days. Gulf-Japan benchmark was down by $2 per Mt to $61 per Mt and also for PNW-Japan down to $35 per MT.

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

Increased availability keep coarse grain prices stable; Milk prices will pressure inflation, increased availability can help

Increased availability keep coarse grain prices stable

On pan India average prices have gone up slightly by 1.8% to Rs.9300 ($200) per MT and remain higher than last year by 11%. Prices in Gujarat, Karnataka and Uttar Pradesh have come down by 3.9%, (Rs.9783/$210), 1.3% (Rs.8565/$184) and 0.29% (Rs.10064/$216) respectively, while prices have moved up in Andhra Pradesh, Maharashtra, Rajasthan and Tamil nadu by 0.20% (Rs.8656/$186), 2.8% (Rs.8637/$185), 0.76% (Rs.9688/$208) and 0.8% (Rs.8800/$189) respectively. There is also anticipation of a good crop in Rabi, which may not cover the losses in Khariff crop, but will increase availability and pressure prices for some time though.

International cues and good domestic availability has put pressure on maize prices in the futures market. Feb down 1.4% (Rs.8750/$188); Mar down 1.1% (Rs.8930/$192); Apr down 0.76% (Rs.9100/$195) and May down 1% (Rs.9250/$198). In the spot markets, prices were down in Nizamabad by 0.16% (Rs.8889/$190) and Davangere by 1.5% (Rs.8986/$193), but up in Karimnagar by 0.32% (Rs.8786/$189).

Pearl Millet (Bajra) prices have been stable at Rs.9620 ($206) per MT, and are up against last year by 15.8%. Against maize the prices are up by 3.3%.

Sorghum (Jowar) prices have slid lower this week again by 2.1% to Rs.10685 ($229) per MT, but have remained higher than last year by 12.9%. Prices are higher than maize by 12.9%.

Barley prices on pan India average are up by 5.9% to Rs.10015 ($215) per MT and are higher than last year by 13%. . Prices are also up in the futures slightly by 0.8% for Apr (Rs.9620/$206) and 0.14% for May (Rs.9800/$211) and down for June by 1.5% to Rs.9850 ($212) per MT. In the spot market though the prices are stable at Rs.9290 ($199) per MT.

On the CBOT, corn prices are down for Mar contract by 2.46% to $136.68 per MT, only due to large stocks in US and good corn crop anticipated from Argentina and Brazil. May contract was up slightly by 0.26% to $144.87 and July down by 1.86% to $148.81 per MT. Prices on FOB basis (US Gulf and PNW) were indicated at $165/166 and $187/190 per MT respectively for Feb/may period. Sorghum prices on US Gulf basis were indicated to be higher than corn at $169/174 per MT.

Due to positive ethanol margins and increased availability, DDGS prices are under pressure in the domestic market and demand is increasing in domestic as well as export markets. Prices were indicated at $159/166 for Feb/May period on Fob basis (US Gulf) and CNF to China was indicative at $237 per MT for a 37% pro-fat DDGS.

Freight markets were down as Chinese buying is slow as the date for Chinese New Year approaches. Gulf-Japan benchmark was indicated at $63 per MT, while PNW-Japan was down to $37 per MT. Argentina/Brazil - China freight was indicated at $47/50 per MT, down by $3-4 per MT.

Milk prices will pressure inflation, increased availability can help

Food inflation is again up to 17.56% for the week ending Jan 23, 2010. Most of the co-operatives in India specially in Gujarat, Maharashtra and Karnataka have increased the milk prices in retail claiming increased prices of feed and ingredients. The increased milk prices in Feb will put pressure on food inflation and unless milk production can be increased and milk availability in the market be increased, prices are not going to come down.

While new germplasm has been introduced in India increased production will only be available 3 years from now, however to enhance milk availability immediately, farmers can use a Calf Milk Replacer (CMR), which will cost less (atleast 10% lower than the sale price of milk) and free milk for the farmer to sell/pour in the dairy. In the first 4 weeks, a calf can consume about 90 - 120 liters of milk, depending on its size. It is a sizable amount of milk in one year based on the large number of livestock India has and calves born. Considering 24 million females calves, consuming 100 liter of milk, it would be 2400 million liters (2.4 MMT) of more milk available for human consumption.

Amit Sachdev,

India Representative,

U S Grains Council.

E mail: usgcindia@gmail.com