India maize prices stable, rain damage reported; Despite prices moving up, DDGS remains a feasible protein source; US ethanol price competitive, can ease the Air Pollution pain

Maize arrivals started in different states at the market yards and the prices remained stable, moved down for some time and suddenly saw a spurt. On Sept 22 2017, Spot maize price in Jalgaon was Rs.13300/MT and on Oct 18, 2017 was Rs.13500, a small increase. Prices in Davangere were however down from Rs.15250/MT on Spet 22, 2017 t o Rs.14600/MT on Oct 18, 2017, just before the Diwali season. Prices in Sangli also increased a bit from Rs.14650/Mt to Rs.14800/Mt in the same period. Rains in parts of South India seem to have damaged crops in some parts and that could not only affect the quality of the material, but also the quantity of the supplies. As per the new data availably, the Khariff crop has already been projected lower than last year at 18.73 MMT by GOI, against 2016/17 production estimate of 19.24 MMT.

The harvest of US corn continues. As of last week 28% corn has been harvested, weather is good for harvest and that seems to help in easing the corn prices in the US. While US corn arrivals at the elevators will be good, for crops sold earlier, if the prices do remain low, US farmers will tend to store the crop at the farm level. The harvest at this point is delayed as over 90% of the crops is mature. As the weather improves, the harvest pace too will increase.

In the end of Sept 2017, the corn price on CBOT was $139.83/MT (Dec); $144.71/MT (Mar); and $148.10/MT (May) and the prices have eased and last week closed at $135.58/MT (Dec); $141.90/MT (Mar) $144.56/MT (May). The lower prices were made sure that the prices on FOB basis remain stable, especially US Gulf, where the prices were indicated at $159/MT and at PNW prices were down by $10MT to $169/MT against Sept last week. Agrentine corn prices were indicated at $147/Mt. Brazil at $151/Mt and Black Sea (Ukrainian) at $153/MT.

As the prices of corn eased, price of DDGS have also come down and indicated at $177/Mt (US Gulf) and $193/MT (PNW). Delivered prices have tended to move up only because of the freight rates moving up. Delivered price of DDGS to Vietnam and China $204 and $205/MT respectively. Price to B’desh rose to $226/Mt this week and to Myanmar $223/MT. US DDGS price at this time is still lower than soybean meal on per unit protein basis in the US on FOB pricing. While US SBM 48% is $7.2/unit of protein; US DDGS is $6.32/unit of protein and also provides additional energy (7% fat).

US ethanol prices have continued to ease in the last few weeks. US ethanol on CBOT in end of Sept was priced at $1.486/gallon (Nov); $1.460/Gallon (Dec) and $1.433/Gallon (Jan). the priecs in three weeks are down and indicated at $1.386/Gallon (Nov); $1.385/Gallon (Dec); and $1.378/gallon (Jan). US Ethanol price on FOB basis has also eased and averaged $0.390/liter against Brazilian ethanol at $0.568/liter, a differential of 45.64 percent. The same is also true for Aromatics (which are blended in gasoline) and the average price in the US (FOB) is $0.64/liter. US ethanol is much cheaper (61.54%) than aromatics that are normally used in fuel as an additive for octane and also for burning, but are responsible for the Particulate Matter. Ethanol burns better and completely and at higher blends rates the Particulate Matter (PM less than 1) is also less.

In the current state as the Diwali festival is over, even as the bursting of crackers was banned in NCR the Air pollution problem persisted. As the nights get colder and winter sets in, the Air is likely to get much heavier. Clean burning fuel for cars is the key and Oil Marketing Companies (OMC’s) came out with the tender to purchase 3.13 billion liters of ethanol for an E-10 blend in the year 2017/18. The production of ethanol from Molasses route is expected to be 2.53 billion liters and there are also other industries (potable, industrial), who would need ethanol as well. Even if the sugar industries could provide 1 billion liters, 0.29 billion liters higher than last year, the blending rate achieved will be 3.19 percent. To fulfill the E-10 blend mandate 2.13 billion liters will need to be sourced from outside/imported. The current price of Molasses based ethanol is Rs.39/liter ex factory and the equivalent price in US is Rs.26/liter (FOB) and after accounting for freight, it could be delivered to Indian shores at a much cheaper price.

Amit Sachdev, Serving Agriculture and Livestock in India, Bangladesh and Sri Lanka * E Mail: amit@techproindia.in

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