US corn production to be down, prices down; Sorghum fits into the rations at the current price; DDGS remains a good buy; Ethanol can be one tool to combat Air Pollution

The WASDE report was out this week and corn production in the US is projected to be down at 356.61 MMT, but overall corn production in the world in 2018/19 is expected to be up at 1056.07 MMT. Overall the world is likely to consume more corn and world ending stocks are likely to go down from 194.85 MMT in 2017/18 to 159.15 MMT. Ending stocks for US are likely to be 42.73 MMT against 55.44 MMT in 2017/18. Countries that are expected to produce more corn in 2018/19 include Argentina (41 MMT against 33 MMT in 2017/18); Brazil 96 MMT against 87 MMT in 2017/18); and Ukraine (30 MMT against 24.12 MMT in 2017/18). Production of corn in EU is expected to be down to 61 MMT in 2018/19 from 62.10 MMT in 2017/18 as per the WASDE report.

On the use of corn in the US, Feed use is expected to be down to 136.52 MMT in 2018/19 against 140.78 MMT in 2017/18, but corn for ethanol is expected to go up marginally to 142.87 MMT in 2018/19 against 141.60 MMT in 2017/18. Overall Feed Seed Industrial (FSI) use is expected to be up at 180.72 MMT in 2018/19 against 178.81 MMT in 2017/18. Expect more DDGS production and more ethanol production in the US. Corn exports are expected to be down at 53.34 MMT and ending stocks down to 42.72 MMT.

Corn planting this week is still lagging behind and is at 39% against 44% (5 year average). Last year at this time the sowing was up at 45%. Overall it should have been a signal for higher prices, but it was not. Corn prices on CBOT closed lower this week. May down 2.26% to $153.38/MT; Jul down 2.41% to $156.05/MT; Sept down 2.08% to $159.44/MT and Dec down 1.57% to $163.14/MT. Lower prices on CBOT also signaled lower FOB prices and indicated price of corn at US Gulf were $193/MT and PNW at $203/MT. Argentine corn is indicated at $192/MT and Brazilian at $183-186/MT (For July-Aug shipments). Black Sea corn on FOB basis is indicated at $198/MT.

Indian corn prices are mixed this week. Prices in South (Erode) were indicated up by 1.37% at Rs.13887/MT and prices in Bihar down by 3.54% at Rs.11575/MT. With thunderstorms across the Northern belts, there is damage to harvested grains in many market yards and it is still being accessed. Harvest in Bihar is late and also there was the grain filling issue that will reduce arrivals in some parts of Bihar.

US Sorghum prices at this time are lower than corn on FOB basis and indicated at $189/MT. US Sorghum, which is zero tannin can be used in combination with corn, without any difficulty. As the prices are lower, almost 0.7 MMT of Sorghum has been shipped out of US for Saudi Arabia and Spain. Other countries are also looking to buy Sorghum.

DDGS prices on FOB basis (US Gulf) were down this week by 6.54% to $243/MT. Moving forward the prices are indicated lower for Aug delivery at $235/MT. Delivery of DDGS in the region in Chittagong in May was indicated at $293/MT and in Aug $291/MT. Delivery to Myanmar down slightly at $290/MT and for Aug down to $288/MT. Other plant protein prices, including CGM were stable at $615/MT on FOB basis. US SBM was indicated little lower at $449/MT, Argentine at $434/MT and Brazil at $419/MT. US DDGS is still priced lower than SBM on protein basis and with higher energy level makes a valuable feed ingredient.

In the first three months of the year 2018 (Jan-Mar 2018), Bangladesh has bought 30,000 MT of DDGS, 68% more than last year’s purchase. Sri Lankan purchase is at par with last year, just about 8% higher than last year at 5424 MT. Myanmar has purchases 11,943 MT, 140% more. All these countries are buying US DDGS as they see a value in the product and there is an ingredient in the feed mix to work with, which helps in keeping the prices of feed stable and value of animal protein affordable to the consumers.

US ethanol prices on CBOT were down. June contract down 2.6% to $0.3860/Lit; Jul down 2.06% to $0.389/Lit; Aug down 1.98% to $0.3939/Lit and Sept down 0.86% to $0.3974/Lit. US ethanol remains the cheapest Octane booster in the world and for those who are using high priced aromatics (82% higher than ethanol), they are also paying the price of higher pollution. There is enough evidence to prove that higher blends of ethanol can help reduce Carbon Emissions and Particulate Matter in the air which effect the young and the old alike. But countries need to have uniform norms for blending across the country and ethanol should be made available at all locations and its benefits available country wide.

Amit Sachdev, Serving Agriculture and Livestock in India, Bangladesh and Sri Lanka * E Mail: asachdev@grains.org

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