Indian Maize prices down, but not competitive enough for the world; DDGS prices up, but still competitive

Monsoon reached India, sowing has started and moving at a good pace. maize has been plated on 0.307 million hac and still a long way to go. Overall prices of maize have declined in the market and in Bihar the prices were Rs.12400 per MT at the rake point and delivered to destinations at 15500/MT, approximately $238/MT, higher than the world prices. In most of the locations, US corn is delivered in containers at prices ranging from $199-208/MT, making their products more competitive in the world market. Bulk prices would still be cheaper as FOB prices are close to $165 (FOB (US Gulf) and $175/MT  (PNW).

Screen Shot 2017-06-12 at 11.00.45 AMAlmost 96% of the crop has been planted in the US and there has been some dry weather which is cause of concern in some areas and that led to higher prices of corn on CBOT. July corn closed at $152.59/MT, up 4.05%; Set $155.74/MT, up 3.90%; Dec $159.83/MT, up 3.84% and mar 2018 $163.22/MT up 3.46%. Higher corn prices also translated into higher DDGS prices somewhat and it was quoted at $160/MT US Gulf and $178/MT PNW. These prices are in Bulk. Delivered prices in containers to Vietnam were $191/MT and $189/Mt to China. In close by areas, deliveries to Bangladesh are being quoted at $208/MT (for 40 feet containers). Bulk prices again will be little lower and Pakistan buyers have purchased DDGS in bulk at lower prices. From Jan to Apr 2017, Bangladesh has purchased almost 23,000 MT of DDGS, up rom last year’s 4185 MT; Myanmar has purchased 8790 MT from Jan – April 2017 against last year’s 3733 MT. Pakistan too has purchased some 17,000 MT. Overall most countries continue to purchase and use DDGS as it is consistently available and a attractive prices. Currently DDGS is priced at 97% of corn on FOB basis.

Ethanol prices in US showed a decline this week and might move up as corn prices moved up. Jul $0.4101/lit; Aug $0.4106/Lit; Sep $0.4101/Lit; and Oct $0.4082/lit. While in most cities, a Air Plan has been put in place, but it is only to monitor the air pollution and nothing on finding a solution to Air pollution. India’s demand of petrol continues to grow. In May 2017, the demand of petrol grew by 15% and one the next few months as the demand will grow, the blending of petrol with gasoline will actually be lower. As monsoon covers India, the Air Pollution will not be a major problem, but as we move into winter – starting Nov 2017, the problem is going to come back.

Amit Sachdev, Advisor, US Grains Council (India, Bangladesh, Sri Lanka); E Mail: usgcindia@gmail.com

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India maize prices stable, but higher than the world; DDGS could make Indian livestock production viable

India is expected to get a normal rain in 2017 monsoon. Expectations are high for the Khariff crop as farmers get ready to plant the new crop of maize. In the US, on the other hand almost 85% of the maize crop has been planted. There have been some weather related breaks in the sowing of corn in the US, but overall it still looks good.

On the price front, Indian maize prices did not rally much on a weekly basis and have been range bound, even though the crop is being harvested. Jalgaon prices were in the range of Rs.14000-14250/MT, down 1.72% over last month; Nizamabad 15200-15300/MT, down 0.75% over last month; Davangere in the range 16100-16250/MT, down 0.31% over last month; Sangli in the range of Rs.15900-16100/MT down 1.85% over last month and Gulabbagh din the range of Rs.12600-12800/MT, down 4.17% over last month. This was the max it could do as the supplies were slow and within May, there were few days when rains did effect the supplies to the markets/delivery points.

Indian maize continues to be be highest priced in the world market and even though as per GOI data, India has produced over 26 MMT of maize, India will not be able to export. FOB value will be $250/MT, where as the world prices are much lower. US corn on CBOT was up by about 0.5% and ranged between $147.31/MT for Jul 2017 and $150.23/Mt for Sept 2017 (which will be 2016 harvested crop) and prices for Dec 2017 were $154.48/MT and for Mar 2018 at $158.34/MT. FOB prices were indicated at $162-163/MT (US Gulf) and $173-174/MT (PNW) for delivery in Jun-Aug period. Argentine corn was indicated at $153-160/MT and Brazilian corn at $159-163/Mt for the period Aug-Sept 2017. Brazil corn though is prices lower, there are issues with the port infrastructure also. Black sea corn this week was indicated at $164-168/MT.

As with the prices of corn which has come down in the one month period, the freight costs have also come down in one month period, making corn consuming industries in importing countries more viable and competitive. The benchmark US Gulf-Japan freight this week was down 0.67% to $37/MT and over a month was down by 6.92%. PNW – Japan freight was down 2.56% this week to $19/MT, down 9.52% over last month. US Gulf-China indicated at $36/MT down 0.69% over last week and down 7.10% over last month; PNW china indicated at $18/MT, down 1.37% over last week and 10% over last month.

DDGS prices have been moving up this week and indicated at $155/MT in bulk US Gulf, up. 4.73% against last week. Prices were up 5.44% over last month. This also means that there is ample demand in the market, which is leading to prices moving up and it still is feasible buy for use as a fed ingredient of choice in poultry, dairy and aqua feeds. Delivered prices of DDGS to Vietnam in containers was indicated at 182/MT (Same as last week) and up 4% against last month. CNF China was  $177/Mt and no change against last week or up 1.14% against last month. in 2016, Indian neighbours purchased more DDGS. Bangladesh 38,900 MT and for the period Jan-Mar 2017, 17800 MT has been imported (Most of those imports were in containers). Pakistan imported 64900 MT in 2016 and for the period Jan -Mar 2017, 16127 MT has been imported. Myanmar imported 25040 MT in 2016; 4978 MT has been imported in the first three (3) month of the year 2017. It is a product/ingredient that can potentially reduce feed cost and ultimately cost of production of chicken, eggs and milk. India is an exporter of marine products and farmed fish and shrimp can also be fed with DDGS, making it more competitive.

US ethanol prices too have been down. Though against last week, the prices were up by 2.49% and indicated in the range of $0.4021-0.4066/litre. Against last month the price are down by 2.59% for June, for July though the price is down by 0.90% to $0.4066/litre.

Over the last few days, it has been pleasant weather, rain and winds, which have helped mitigating the Air pollution in Delhi and surrounding areas, but this may not last for long and ethanol in gasoline is one way to mitigate Air pollution most effectively. A clean burning fuel additive is what India needs and ethanol is one such additive the world has, which is cheap and can be used effectively and efficiently.

It is not only the air pollution, but the price difference that gets passed on to the consumer. E0 – no ethanol gasoline is priced at the pump at $2.44/gallon, while E10 (with 10% ethanol) priced at $2.14/gallon; E15 (with 15% ethanol) priced at $2.04/gallon; E30 (with 30% ethanol) prices at $1.99/gallon and E85 (with 85% ethanol) at $1.74/gallon. In the last one year, the prices of E10 have remained lower than E0 in the US and it has made sense for US consumers to use less fossil fuel and more of ethanol. In addition, it is the choice of the consumer and at the same time, the type of the vehicle the customer drives. It is not only the saving’s but the octane value that the customer gets. Ethanol as on date could be the cheapest source of octane.

Amit Sachdev, Advisor, US Grains Council (India, Bangladesh, Sri Lanka); E Mail: usgcindia@gmail.com 

 

 

 

 

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Ethanol & DDGS benefit environment; Both are competitively priced corn co-products for different uses; India’s maize prices remain higher

Ethanol and DDGS both have environment befits, one through fuel and the other one through livestock feed; both are priced competitively for their respective use. Both the products are made from corn. While Ethanol can be used as a clean burning fuel additive, recent studies reveal that feeding DDGS to dairy cattle  as well and poultry not only helps in providing quality protein and energy, but also has environmental benefits.  Feeding DDGS to dairy cows was found to reduce methane production and reduce phosphorus excretion in poultry manure. Both findings have significant environmental benefits, those of lowering greenhouse gas emissions and reducing phosphorous runoff from manure-fertilized fields. Ethanol has a place in fighting air pollution while DDGS has a place as a feed ingredient to achieve achieve production levels and environmental goals, which certainly have a value in today’s times of climate change. 

DDGS prices in the world market have remained stable to about one month now, FOB prices (US Gulf)  are indicated at $147/MT and PNW at $169/MT. Delivered prices to Vietnam and China at $175/MT. It is worth a buy and including in livestock rations at these prices. Unit price per protein on FOB basis for US DDGS is $5.25 agains US SBM at $7.29.  If the prices for Indian SBM delivered to a feed mill is  taken into account at Rs.28000/MT with 44% protein, value per unit of protein is Rs.636. IF USDDGS is imported duty free into India, delivered to feed mill at Rs.13200/MT, with 28% protein, per unit protein value would be Rs.482 an + 7% fat (providing energy) and gene the environmental benefits are not accounted for.

Acknowledging that Delhi air is bad, the government of Delhi wants all schools to install Air Purifiers. Can it help? Instead it is important that the fuel quality be improved by adding clean burning additives like ethanol that will help in  solving some of Delhi’s air pollution problems in the long run. There are several studies to prove that the biofuel policy should be aimed at not only at energy security, but also overall economy and the environmental benefits that can accrue with the use of ethanol in an economy. In the APEC (Asia Pacific Economic Cooperation) countries, the basis aim of introducing ethanol blending fuel was reducing Green House gas Emission (GHG) and diversify transport fuels. Additional benefits as investment in agri sector accrued as the mandates was set and implemented in the countries. Trade was open, unrestricted till the time domestic production cannot fulfill the demand. Trade remains open as the demand is higher than domestic supplies and production of domestic ethanol also continues to increase. Price of ethanol in the US have come down this week, indicated on CBOT at $0.4122/ litre for May, down 4.06% against last week; Jun down 2.68% to $0.4127/litre; Jul down 1.77% top $0.4103/Litre; Aug down 1.34% to $0.4079/Litre and Sep down 0.71% to $0.4053/litre. This when the plants are going on maintenance. There is ample corn, DDGS and ethanol in the US to fulfil the needs and all are priced competitively and

US corn prices however moved up slightly for the next four months on CBOT, indicated at $140.94/MT for May 2017, up 0.28%; Jul up 0.51%to $143.88/MT, Sept up 0.86% to $147.31/MT and Dec up 0.79% to $151.57/MT. Corresponding FOB price US Gulf indicated at $161/MT and PNW at $174/Mt. Argentine and Brazil corn on FOB basis indicated at $158/MT (Aug/Sept) and Black Sea corn (Ukraine) at $169/MT. There is likely to be some pressure on the prices in coming weeks and the weather conditions in South America remain ideal for harvest as well as sowing. US corn has been sown in 17% of the area, a little slow than last year and there is a delay expected as there are rains in Midwest and more rain is expected, which would delay the sowing.

India’s maize harvest continues, but the Spot prices have not softened, expect in Davangere where prices were down this week by 0.92% to Rs.16150/MT and in Gulabbagh (Bihar) where p[rices were down by 0.75% to Rs.13200/MT. Jalgaon prices were up by 0.87% to Rs.14500/MT; Nizamabad up by 0.49% to Rs. 15300/MT and Sangli up by 3.85% to Rs.16200/MT. Since last one month (30 day period), prices are down in Jalgaon by 0.68% and in Gulabgah by 9.28%. In Nizamabad prices are up by 3.62% and in Sangli 5.19%.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

 

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Ethanol for air pollution mitigation; India harvests maize, prices up; US corn cheaper; DDGS prices drop

As the temperatures move up and Air quality deteriorates as higher temperature, sunshine, actually aid ‘Chemical Reactions’ and create a kind of “gas Soup” which combines with the particles, creating a smog of ground level ozone gas. This makes breathing difficult, especially for those who have respiratory ailments and also for Children and the elderly. While it may not be possible to reduce temperature, but it is possible to reduce the emissions from the cars, by using clean burning fuels and additives like ‘ethanol’, which is being used not only in the US, but also in Brazil, Philippines, Peru and many other nations. Based on the current price of Rs.39/litre ++ (EX sugar mill in India) and additional domestic transport, it is delivered to the a depot of Oil Marketing Company (OMC) at Rs.42/litre is mixed in gasoline, at 5-10% as and when available, it finds its way to the pump and finally the car. India’s demand of gasoline is about 28 billion litres, increasing at 8-10% per year and the demand of gasoline for E -10 blend (10% ethanol and 90% gasoline), would be 2.808 billion litres and the sugar industry has been able to offer 0.81 billion litres in the sugar year 106/17 (ends Oct 2017) which effectively would mean a blend for 2.88% if all gasoline gets blended with ethanol). In some states, it may be higher and is some ZERO as no offer has been received. The current price of US Ethanol is $620/MT and with duty paid it would cost Rs.32.44 per litre, With additional cost of Rs.5 to cover denaturing, transport etc it would cost Rs.37.44 (Max) per litre to the deport.  A clean burning additive that is cheaper and the reduced prices can also be passed on to the consumer. Other nations have been using the clean burning alternative fuel, including ethanol for many years and it has proved to be not only an effective tool to mitigate Air Pollution, but saves money to the consumers by reducing the cost of gasoline and keep the engine clean.

Corn sowing has started in the US and about 6% corn has been sown. It be behind 5-year average, but is just the start and the planting will catch up. US prices were down this week in the range 3.14 – 3.81% on future prices as the market was under pressure due too developments in Brazil, the good weather which is making sure the corn gets planted. may corn was down 3.77% top $140.54/MT; Jul down 3.81%to $143.14/MT; Sept down 3.48% to $146.06/MT and Dec down 3.14% to $150.38/MT. Lower prices got reflected in the FOB prices and US corn was indicated at $156-159/MT (FOB US Gulf) and in the range of $170-174/MT (PNW). It is being quoted as delivered to China at $200/MT, Argentine corn is priced at $153-158/MT (FOB) and Brazilian at in the range of $156-162/MT, Its delivered price to China is about $207/MT. Similarly Black se corn at this time is being at $164-168/MT and may be quoting at $190/MT delivered to China (China is being consisted a point in the Asia region and trying to set a benchmark price around it for the Asian region)..

While some of the ethanol plants are closed for annual maintenance and that should make DDGS prices higher, but the prices have remained stable and DDGS is still priced at 92.3% of corn. It is still the cheapest source of protein (on per percent basis), which US SBM at $7.18 per percent protein and US DDGS at $ 5.14 per percent protein. The difference is also higher this week against last week. US DDGS is indicated $144/MT (FOB) for 28% protein and US SBM at $345/MT for 48% protein.

Maize harvest in India continues and stocks is arriving at the market yards, but the prices remain high. Prices in Bihar at Gulabbagh came down by 0.75% to Rs.13300/MT and delivered prices of corn from Bihar to SouthIndia quoted at Rs.15800-16200/MT. Prices in other locations including Jalgaon up 0.88% to Rs.14375/MT; Nizmabad up 2.18% to Rs.15225/MT; Davangere up 0.46% to Rs.16300/MT; Sangli up 0.48% to Rs.15600/MT. Future prices too have shown an upward trend May Rabi maize up 3.71% to Rs.13700/MT; Jun Rabi up 4.57% to Rs.14180/MT; July rabi up 4.03% to Rs.14470.MT and Aug Rabi up 3.86%t o Rs.14810/MT. This is up when the Rabi harvest has just started.

The benchmark freight rates showed a upward trend this week. Benchmark US Gulf-Japan indicated at $40.5/MT; PNW-Japan $22/MT; US Gulf-China $39.5/MT; PNW-China $21/MT; Argentina-Brazil to China ranged between $40.75-31.50/MT.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

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India maize prices stable, US corn prices down; DDGS is a cheapest protein source, prices could move lower

Even though arrivals have started the prices of Indian maize have tended to remain up. The future prices for Apr (Rabi) up 2.31%to Rs.12850/Mt, Apr (Khr) up  2.56% to Rs.14440/MT; May (R) up1.92% to Rs.13300/MT; Mat (Khr) up 2.61% to Rs.14540/MT; Jun (R) up 0.68% to Rs.13340/MT; Jun (Khr) up 2.66% to Rs.14640/MT; Jul (R) up 2.36% to Rs.13460/MT and Jul (Khr) up 2.72% to Rs.14740/MT. Aug (R) closed at Rs.13460/MT and Aug (Khr) at Rs.14840/MT. In the spot market to, prices  were mixed with Jaggaon at Rs.14250/Mt down by 2.40% and in Gulabbagh down by 0.34%to Rs.14500/MT. In Davangere prices were up by 0.31%  to Rs.16200/MT and also in Sangli up by 1.30% to Rs.15600/MT. Prices in Nizamabad were Rs.14766/MT. In Hyderabad region delivered prices were being quoted at Rs.15300-15500/MT delivered to feed mill in the region.

In the US while there was an initial uptrend in corn prices due to a lower expected crop in 2017/18 planted in 90 mill acres that would produce some 365 MMT of corn, which still would be good crop. But in the interim the demand in US is also likely to increase for feed and ethanol use which could keep the prices stable. But there is a also a good South American crop and higher world ending stocks that could keep the prices down. CBOT closed lower against last week, may down 1.32% to $141.49/MT; Jul down 1.18% $144.56/MT; Sept down 1.21% to $147.47/MT. Dec 2017 corn closed at $151.33/MT. US corn on FOB basis (US Gulf) was quoted at $157-160/MT (Apr-Jun delivery) and PNW at $173/MT. US DDGS is still priced at about 93% of the corn on FOB prices, $146-148/MT (US Gulf) and $164-166/Mt (PMW). Delivered prices to Indonesia were indicated at $175/MT; Vietnam $185/MT and China $177/MT. Other corn co-product – CGM was priced at $595/MT. DDGS is the cheapest protein available on FOB basis at $5.25 per percent protein and gives addition 7% fat, which needs to be valued. DDGS could be expected to remain stable or even go down as US farmers will move their cattle out in pastures in spring.

The benchmark freight rates showed a decline this week. Benchmark US Gulf-Japan indicated at $39/MT; PNW-Japan $21/MT; US Gulf-China $38/MT; PNW-China $20.25/MT; Argentina-Brazil to China ranged between $38.25-29/MT.

US ethanol prices moved up on higher demand and somewhat lower production duet o seasonal maintenance of the plants. May up 0.62% top $0.431/litre; Jun up 0.25% to $0.425/litre; Jul down 0.75% to $0.42/liter and Aug closed this week at $0.416/MT. With USD-INR exchange rate at Rs.64.7623 to a dollar, it is cheaper to import these days as it was in last year. India has also removed the tariff on raw sugar for a limited period, and 0.5 MMT of raw sugar can be imported until Jun 12, 2017. This is primarily aimed to keep some of the plants in port areas running and keep sugar prices in check in some regions.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

 

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US farmers to plant less corn, more Soy; India maize prices stable, new arrivals in Bihar; DDGS prices down, value for money

The planting intentions report from US was out on Mar 31, 2017. Farmers intent to plant little less corn in 2017, 90 million hac against 94 mill hac planted in 2016 – down 4.25%. Farmers intent to plant more Soybeans in 2017, 89.5 mill hac, up from 83.4 million hac planted in 2016, up 7.31%. Wheat planting too is expected to be down to 46.1 mill hac, from 2016 sowing on 50.20 mill hac. Cotton too is expected to be up at 12.2 mill hac from 10.07 mill hac. As farmers get on the fields and the weather permits we will see how these numbers unfold over the next few weeks.

In India, maize arrivals have started in Bihar, the main Rabi maize producer. Prices where were ruling at Rs.15500/Mt on Spot about a month back (feb 24, 2017)  are now at Rs.14550/MT at Gulabbagh (NCDEX Spot) down 6.13%. In last one week however prices moved up bit up 0.34%. Open market price would at Rs.12000-12500/MT, which for a new high moisture corn would be fair price. Prices are fairly stable over one month at other locations, demand continues, Jalgaon Rs.14600/MT, up 2.46% over one month; Davangere and Sangli stable at Rs.16150/MT and Rs.15400/MT respectively.

US Corn Futures - Dec'16- Mar'17Prices of corn in the US continue to be stable for last three week, though in the first week of March there was a price spike, which later stabilised. On Mar 31, 2017, Corn on CBOT closed lower than last month end, but higher than last week. May $143.37/MM up 2.20% against last week; Jul $146.29/MT up 2.16% and Set up 1.12% to $149.28/MT mainly due to lower planting intentions for corn. Early in the week, the prices were down as the prices is Argentina/Brazil is keeping the pressure. FOB prices were indicated at $160/MT (US Gulf) and 4170/MT (PNW). Argentine corn on FOB basis indicated at $163/MT; Brazilian at $162/MT and Black Sea at $170/MT.

On the protein side, DDGS prices on FOB basis have declined in this last one month and currently DDGS is priced at $146/Mt (US Gulf), 7% down over the price indicated on Feb 24, 2017. Delivered price to Vietnam at $185/MT and to China at $178/MT. With rupee appreciating 2.82% in last one month and trading at Rs.64.7236 to a dollar, US DDGS is value for money and could be delivered to an Indian port in West coast at Rs.12350/MT at port. With clearing costs and transport to a feed mill, it should cost no more than Rs.14500/MT (Duty free) and with 28% protein, it would be possibly one of the cheapest protein source and will provide additional 7% fat which will need to be valued. At this time DDGS is priced at 91.25% of corn price on FOB basis. In most of Feb it was 94% of the corn value (FOB) and prices have dipped considerably.

US ethanol prices in one week moved up on CBOT. Apr $0.427/liter; up 4.81%; May $0.4283/Liter, up 3.52%; Jun $0.4243/Liter, up 2.3%; Freight rated Dec'16-Mar'17Jul $0.423/Liter, up 2.24/MT. But with the rupee appreciating 0.88% in this one week, the change in ethanol prices is not much.

Freight rates have continued to move up consistently is last quarter. Benchmark US Gulf-Japan indicated at $39.25/MT; PNW-Japan $21.25/MT; US Gulf-China $38/MT; PNW-China $20.5/MT; Argentina-Brazil to China ranged between $38.25-29.25/MT.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

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India maize price stable, US futures up, FOB down; Ethanol & DDGS are the best buys; India Barley prices up

Reporting from Washington Dulles Airport.

India’s maize prices remain stable, but higher than the world market.  Spot prices in Nizamabad up 1.51% against last week to Rs.14694/MT; Davangere up 1.42%to Rs.16025/MT; Sangli down 1% to Rs.14800/MT and Gulabbagh up 0.46% to Rs.16500/MT. Overall area under Rabi maize is also up, expect a good crop, but a major drop is prices may not be there. Future prices though have shown a decline. Jan down 0.71%to Rs.14030/MT; Feb down 0.76% to Rs.14370/MT; Mar down 1.21% to Rs.14650/MT; Apr stable at Rs.14930/MT and May up 0.33%to Rs.15210/MT.

Mar corn contract Jan 13, 2017While future corn prices have moved up a bit and Mar corn closed 0.11% higher at $141.09/MT; May up 0.22% to $143.85/MT and Jul up 0.27% to $146.61/MT, US FOB prices remain competitive and were down by a $1/MT, indicated at $166/MT (US Gulf) and $178/MT (PNW). The biggest drop though has been in the DDGS prices this week and a drop of $9/MT to $139/MT (US Gulf) and $4/Mt drop to $172/MT (PNW) indicative prices Delivered prices to the main destination in Asia down as well and CNF price to Vietnam dropped $6/Mt to $180/MT and to China by $10/MT to $175/MT. DDGS remains the most optimally priced plant protein today and there is plenty available in the US and at this prices, livestock farmers can take advantage to reduce the feed costs.

India’s barley prices in the last three months have risen by almost Rs.1820/MT, an increase of 11.22% and currently spot prices Spot Barley Prices in India in Rs./100 kgare ruling at Rs.18030/MT at Jaipur. India has imported some stocks from Argentina and France and much cheaper prices (Rs.14000-15000) delivered to Kandla in bulk in the last few months.  US barley prices are currently ranging between $185-190/MT.

US ethanol prices this week have come down and are very competitive in relation to other origins. US ethanol on CBOT for Feb contract was down 5.57%to $0.39/liter; Mar down 4.81% to $398/liter; Apr down 3.61% to $0.403/Liter and May down 2.23% to $0.407/Liter.

Bulk freight rates have been moving up slightly and steadily and the benchmark US Gulf-Japan freight rate was indicated at $35/ MT and PNW-Japan at $18/MT; US Gulf-China quoted at $34/MT and PNW-China at $17.25/MT. Argentina/Brazil to China indicated in the range of $31.50-22.5/MT.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

 

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Maize prices stable in India, down in the US; Maize area up in Rabi; DDGS is an economical feed ingredient

US Corn and DDGS prices Oct - Dec 2016The last quarter of 2016 with the new crop harvest in India and the US saw increased availability in both the countries, but also several issues.

In the US the harvest was good, productivity excellent, much higher than expected, which led to lower prices in Nov 2016 and by early Dec 2016 the FOB price of US Corn (US Gulf) was down to $152/MT. Since then there has been an improvement but still prices are much lower at $166/MT US corn is possibly the cheapest corn available in the world market. South America was facing a problem of lower moisture and planting, which made exports from US viable. US DDGS production has been good, low corn prices made sure that ethanol plants were running smoothly. Even before the Oct harvest US DDGS was a competitive product and from Jan – Oct 2016, the world had traded 9.6 MMT of DDGS. In the Indian neighbourhood, Myanmar imported more than 18000 MT (2700 Mt in Jan – Oct 2015); Bangladesh imported 32000 MT (11000 MT in Jan-Oct 2015). New Zealand imported 71,000 in the period Jan – Oct 2016 as an ingredient to feed its animals, up from 27,000 MT purchased in Jan – Oct 2015; Malaysia purchased over 40,000 MT. By the end of the year DDGS prices in US is down to $153/MT (US Gulf) and DDGS is being delivered to Vietnam at $197/MT.

Indian corn prices Oct - Dec 2016Indian maize production was delayed, even though the area under maize was reported to be higher, there was some damage reported to to delayed rains and rains diurnal harvest. As arrivals started late in Oct, prices have been fairly stable since then in some of the major production centres including Nizamabad, Karimnagar and Sangli at 14500-15000/MT. Arrivals were good in Madhya Pradesh which is a new centre of maize production in India and prices have been Rs.13700 – 14000/MT at the various market yards. Delivered prices to feed mills/starch plants has been close to Rs.15500/MT. Prices in South India however have been ruling much higher continued to be high even after the harvest. Maize was delivered to South India’s primary poultry production centre in Coimbatore at prices between Rs.16500 – 17000/MT in Nov and even early Dec.

The overall area under maize from Rabi sowing is higher than last year by 0.087 mill hac (as on Dec 30 2016) as per the report available from Ministry of Agriculture. Area barley is also higher at 0.079 mill hac (up 0.093 mill hac). However area under Sorghum and Ragi is down. Overall area under coarse cereals is down at 5.221 mill hac (from last year’s 5.629 mill hac). This could be due to demonetisation or just that the there are areas where soil moisture has been low. Overall area under Rabi crop is however higher at 58.287 mill hac, with more area under Pulses and Oilseeds (helped by higher Minimum Support Price announced by GOI).

The poultry industry in India saw an erosion of profits post demonetisation and prices of live chicken dropped to a low of Rs.37/kg. which led farmers and companies to try to consolidate their positions and to get into the mainstream, connecting with the consumers direct. While there are still hiccups, the prices are good, but the losses cannot be recovered and the industry must look at ways and means to deliver chicken and eggs at a reasonable price to the consumer so as the demand remains good. Higher prices also erode demand.

The last quarter also saw the freight prices move up with the benchmark US Gulf-Japan freight moving to over $37/MT and later stabilising at $35/MT. USGulf – China also breached the $35/MT mark in Dec and later settled at $34/MT.

The ethanol market in the US remained strong, prices stable. but the last week of Dec saw prices move up and current prices range between $0.425/liter in Jan 2017, down to $0.413/liter in April 2017. India has imported good quantity of ethanol from US and these imports are for the chemical industries to make specialised chemicals for various uses. Indian ethanol production via molasses is likely to be limited due to less of sugar cane production in 2016 after two years of drought conditions in major sugar cane production areas including Maharashtra, Karnataka, Andhra Pradesh and Telangana. The production is expected to be higher in Uttar Pradesh, but not enough to fulfil the demand or reduction in production.

Hoping the new year of 2017 will be good for agriculture and the end user industries at large.

Wishing every one a very HAPPY and A PROSPEROUS NEW YEAR 2017.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

 

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India maize prices move up; US corn prices also up; DDGS a good buy; Brazil buys US ethanol to fix pollution

India corn prices have moved up in all markets. Arrivals in some markets have come down, like in Nizamabad, while Some markets of Madhya Pradesh have gone up as the harvest is good there. Average market prices some states market yards as on Nov 18, 2016

Karnataka Rs.13500 – 14750/MT Ranebannur, Haveri, Davangere, Shimoga, Chitradurga, Bagalkot)

Madhya Pradesh Rs13000-13650/MT (Chindwara, Shore, Seen, Chapra)

Telangana Rs.13500-13750/MT (Badepalli, Sidipet, Nizamabad) (Medium quality grain with about 3-4% back material available).

The move prices are for loose material.

Spot prices not he NCDEX ports have moved up. Nizamabad up 0.29% to Rs.14425/MT; davanagere up 1.73% to Rs.16150/MT; Karimnagar up 1.67% to Rs.14437/MT; Sangli up 3.45% to Rs.15000/MT and Gulabbagh up 3.07% to Rs.16090/MT. Future price too have tended to move upNov up 4.59% to Rs.14590/MT; Dec up 2.78% to Rs.14440/MT; Jan 2017 up 2.64% to Rs.14750/MT; Feb up 2.93% to Rs.14750/MT and Mar up 2.93% to Rs.14750/MT. Overall sowing of maize in Rabi season as on Nov 18, 2016 was reported at 0.316 mill hac as against 0.42 mill hac last year. About 21% of the total area has been planted so far and with GOI allowing use old denomination notes to purchase seeds and inputs from government run shops, the sowing may speed up.

In the US the prices moved up slightly on higher export numbers. There have been some downtrend as the dollar continues to become stronger. Harvest is ending soon and that higher prices would certainly help the farmers. CBOT closed a little higher on Nov 18, 2016, Dec up 1.53% to $135.98/MT; Mar up 1.26% to $139.13/MT and May u p 1.01% to $141.72/MT. FOB prices more or less remained stable at $162/MT (US Gulf) and $173/Mt (Fob PNW). Argentine corn is indicated at $173/MT and Brazil at $187/MT (FOB at respective ports). Weather has turned in Brazil and sowing is moving at a faster pace.

DDGS continues to be a good choice as a feed ingredient and on protein basis a cheaper choice. US SBM is indicated at $360/MT for 48% protein ($7.5 per unit of protein) and US DDGS (corn) is priced at $170/MT ($6.07 per unit of protein). Indian SBM spot price is indicated at Rs.24000/MT at Indore and delivered to a feed miller would cost Rs.28000/MT for 44% protein (Rs.636 per unit of protein). US DDGS is reaching the region (SEA) at a price of $197-203/Mt depending on the destination, making is a much cheaper source of protein in other markets.

Ethanol continues to be produced in the US and it is expected that the production could go up in 2017, which would also mean more DDGS will become available. Overall the Ethanol prices have gone up slightly this week. Dec up 3.03% to $0.414/liter; Jan 2017 up 2.32% to $0.396/liter; Feb 2017 up 01.58% to $0.392/Liter; Mar up 1.56% to $0.395/liter. Brazil continues to buy US ethanol for blending in its gasoline supply to combat air pollution.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

 

 

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Downtrend in US corn prices; India corn prices down at Market Yard, supplies slow; DDGS prices down in US

What a week it was. Two major historical events in the two largest economies of the world. While the world waited for the execution results on Nov 08, 2016, Just about time, voting started for the presidential elections started in US, India’s Dec Corn - Nov 11, 2016currency was demonetised, the world was shocked. But eventually it sank in that it is good move and weed out corruption and black money in the system. While India slept or many may have remained awake, on the same day on the other side of the world an unexpected win. It is taking time to sink in and the markets were in turmoil due to the two events on two sides of the globe.  But eventually all will be settled and it would be business as usual.

In the US, Nov 7, 2016 report was well received. The harvest was progressing well, export expected to high and Dec 2016 corn prices closed a bit higher on expectations of good election results. The final tally $139.46/Mt on CBOT. The unexpected turn on events on Nov 08, 2016 and the market was down, closing at $134.14/MT and recovered bit in the next day, but closing lower at  $133.93/MT, down 2.41% against last week’s close. Mar 2017 corn down 2.35% at $137.39/MT and May 2017 down 2.36% to $140.31/MT. The downtrend was reflected in the FOB prices at Corn on FOB basis US Gulf was indicated at $162/MT and at PNW $173/MT.

In India the arrivals of corn were steady, but post Nov 08, 2016 demonetisation move the arrivals seem to have come Price comparison - Corn Nov 4 - 11, 2016down, but at the same time, prices have also come down and large denomination currency is not available for cash transactions at the market yards across the country.  The situation is likely to ease within a month, but there could be delay is sowing as the farmers may not be able to get the cash on time. The spot prices were a mixed bag, down in Nizamabad by 0.12% and also in Karimnagar by 2.24% respectively to Rs.14383/MT and Rs.14200/MT, but moved up in other locations. Davangere up 2.42% to Rs.15875/MT; Sangli up 3.57% ti Rs.14500/MT and Gulabbagh stable at Rs.15610/MT. Future prices also closed lower only for Nov 2016, down 1.48% to Rs.13950/MT and higher for all other contracts. Dec up 1.22% Rs.14050/MT; Jan up 1.48% to Rs.14370/MT; Feb up 2.07% to RS.14330/MT and Mar up 1.49% to Rs.14330/MT.

DDGS remains a good buy, remains cheaper on per protein basis. On FOB basis, DDGS costs $5.78 per percent protein ($162/MT US Gulf) and SBM is worth $7.68 per percent protein ($369/MT US Gulf). It mist be noted that DDGS is not a complete replacement of corn or SBM in rations, but can be used as an additional ingredient to manage costs and replace part of corn and soybean meal. Delivered price of DDGS to SEA region is $204/MT CNF Vietnam and $193/MT CNF China.

Ethanol prices too moved lower slightly in the US and Dec contract was $0.402/liter, down 1.81%; Jan $0.387/Liter, down 2.14%; Feb 0.385/liter, down 2.48%; Mar $0.389/Liter, down 2.58%. More ethanol plants are coming back on track after the maintenance. The latest WASDE forecast increased corn used for ethanol to 134.62 MMT, higher than 127.66 MMT used in the last marketing year.

Bulk freight rates have been moving up slightly and steadily and the benchmark US Gulf-Japan freight rate was indicated at $32/ MT and PNW-Japan at $17.75/MT; US Gulf-China quoted at $30.50/MT and PNW-China at $16.75/MT. Argentina/Brazil to China indicated in the range of $29-19.50/MT.

Amit Sachdev, USGC Representative for India, Bangladesh and Sri Lanka * E Mail: usgcindia@gmail.com

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