Maize prices move up in India thanks to world demand; US corn prices at a 4 week high

Maize prices in India on a pan India average basis moved up by 2.6% this week to Rs.10561 per MT (At the market yard). End users report delivery prices ranging from Rs.11800 – 12800 per MT. Prices are higher than last year by 12.4%. prices at the market yards in Andhra Pradesh and Tamil Nadu were down by 0.36% and 2.25% to Rs.10029 per Mt and Rs.10590 per MT respectively. In all other markets, prices were reported to be higher than last week. Gujarat up 0.40% to Rs.11120 per MT; Karnataka up 1.62% to Rs.10324 per MT; Madhya Pradesh up 4.56% to Rs.10464 per MT; Maharashtra up 3.58% to Rs.10398 per MT; Rajasthan up 4.45% to Rs.11000 per MT and Uttar Pradesh up 4.07% to Rs.10667 per MT. One possible reason to the high prices is a slightly better demand scenario and farmers bringing stocks to the markets slowly and gradually rather than dumping stocks. Over the last couple of years higher prices have been able make money and are now capable to store store stocks on their own and sell when they need money.

In the futures market (NCDEX) as well prices were up for the 4 contracts. Jan, up 5.58% to Rs.12005 per MT; Feb up 6% to Rs.12350 per MT; Mar up 7.92% to Rs.12595 per MT and Apr up 3.47% to Rs.12650 per MT. The Dec contract which closed on 20th Dec was also up by 3.8% to Rs.11555 per MT. Spot prices in key markets were also up. Nizamabad up 0.54% to Rs.11453 per MT; Davangere up 0.53% to Rs.11400 per MT; Karimnagar up 0.86% to Rs.11075 per MT and Sangli up 4.31% to Rs.11722 per MT.

Pearl Millet prices were down by 2.7% to Rs.9640 per MT and its movement to south India has started. Prices are down in Haryana and Uttar Pradesh due to abundant stocks. Prices are lower than last year by 3.1% and also lower than maize by 9.6%.

Sorghum prices were stable at Rs.16596 per MT, higher than last year by 18.5% and higher than maize by 36.4%. Farmers in Maharashtra have grown and are wanting to sell sorghum for food at a premium as their is more demand coming from snack foods markets. Being promoted as a health food, has helped sorghum prices.

Barley prices were down this week by 5.7% to Rs.10385 per MT. No major buyers in the dull season. The crops is now planted and will be harvest by Feb/Mar 2012. Prices are lower than last year by 14.2%. On futures (NCDEX), whole prices for Jan were up by 2.84% to Rs. 12198 per MT, prices for Feb were down by 0.4% to Rs.12250 per MT. Apr prices were quoted at Rs.12450 per MT. Dec contract ended at 12142 per MT, 4.6% higher than last week’s close. Spot prices in Jaipur were also higher by 1.08% to Rs.11978 per MT.

On CBOT, corn prices were up and the march contract which closed at 229.51 per MT last week, was up by almost $7 per Mt on the first day of the week and continued to rise by the end of the week with a high of $243.84 per MT, gaining $14.33 per MT (6.24%) in one week. The other two contracts May and Jul were also up to almost same level gaining $14.32 per MT (6.14%) and $14.02 per MT (5.95%) respectively. One of the reason attributed to the prices increase in the brazil weather conditions in at least 25% the corn areas in dry and drought like conditions prevail in Northwestern Region of Rio Grande do Sul State. The productivity loss in the area could be 12-30% by some estimates. Argentina is also facing a similar situation and this could well be the reason for higher prices and a demand pull by many to cover the requirement soon, if the prices do move further north.

FOB prices from the US were reported to be higher by the same value as the gain in the futures market. $264-269 per MT (US Gulf) and $287-294 per MT (PNW). Sorghum price on FOB basis (US Gulf) was reported to be $277-280 per MT, about 5% higher than corn. Normally, sorghum prices are about 98% of corn prices.

Freight rates are rather stable, with the US Gulf-Japan benchmark losing about $1 against last week to $57 per Mt, PNW – Japan was $29 per MT. US Gulf-China freight was reported at $54 per MT down $2 per MT and PNW China at $27 per MT. Argentina/Brazil  to China freight was reported at $54 per MT.

Brazil corn production has been rising gradually, thanks to new technologies adopted by the brazilian farmers in the past. According to the Brazilian agricultural research service (EMBRAPA), for the 2011/12 growing season (corn that is planted now), almost 67% of all the corn grown have planted GM Hybrid corn. For those who will plant in Jan/Feb the number may well go up to 80% or more. 

Just to compare the increase in production in three countries

Production and growth in corn
Brazil Argentina India
Production (MMT) Growth/year (%) Production (MMT) Growth/Year (%) Production (MMT) Growth/year (%)
1960 9.00 4.80 4.10
1970 14.10 5.67 9.90 10.63 7.49 8.26
1980 22.50 5.96 12.90 3.03 6.96 -0.71
1990 24.33 0.81 7.69 -4.04 8.96 2.88
2000 41.53 7.07 15.36 9.99 12.04 3.43
2010 57.00 3.73 22.50 4.65 21.28 7.67
2011 61.00 7.02 29.00 28.89 21.00 -1.32
Source: Index Mundi

 Happy Holidays.

Wishing everyone a Merry Christmas and a Happy New Year 2012

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

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