June 2015: As per the USDA report 92% crop has been planted, against 88% done in 2014. The weather is good for the sowing and growth of the plants. It is likely to remain a weather market from now on, but if there is any other increased end use potential in the US, price may increase. Overall in the US the future prices tended to be down by 2.5% or more for the three contacts and it was reflected in the FOB prices.
July contract closed at $138.34/MT, down 2.39% against last week close; Sept $140.62/MT, down 2.56% and Dec $144.87/MT down 2.54% against last week’s close. FOB prices of US Corn (US Gulf) were indicated at $168/MT (June) and down to $166/MT in Aug. Prices at PNW were indicated at $176/MT for the three month period. Argentine corn prices were at $169-174/MT; Brazil $167-172/MT; Black Sea at $164-171/MT; French corn indicated at $160-167/MT in the month period. Indian corn in Bihar is currently priced at Rs.11300/MT ($173/MT) and is being delivered to South India (At the end users point) at Rs.13400-13600/MT ($204-209/MT). With the delay in monsoon and it being not very intense in the first two weeks as projected by Indian Meteorological Department (IMD), the sowing in South India is expected to be delayed, which could potentially increase the prices. The heat wave in India persists, making 2015 summer t he most hot in 12 years as per the IMD report.
Low DDGS prices spur international demand
The gasoline (petrol in the US) prices are expected to be lower, which could stimulate increased consumption and hence, more use of ethanol in the US. The Environment Protection Agency (EPA) has projected ethanol use at 13.4 billion gallons (50.652 billion litres) in 2015 and 14 billion gallons (52.92 billion litres) in 2016, up from 13.25 billion gallons (50.085 billion litres) in 2014. Also this is reflective of the fact that the corn prices are lower. The ethanol futures price for July 2015 (as on May 29, 2015) was $1.522 per gallon ($0.40/litre), equivalent to Rs.26.17/litre in India. Aug contract closed at $1.50/gallon ($0.39/litre = Rs.25.79/litre).
Higher use of ethanol and its production would also mean more DDGS production and hence lower prices. Current FOB prices of DDGS are much lower and quoted at $239/MT June and down to $229/MT in Aug (US Gulf). FOB PNW indicated at $236-229/MT for the same period. US Corn DDGS contains 28% protein and 5-6% oil and is good source of both protein and energy and in addition high amount of xanthophyll, which is especially helpful in giving that yellow colour to the egg yolk. DDGS prices to Vietnam and China were indicated at $300-291/Mt and $284-273/MT for the three month period respectively, making it a desirable product for use in poultry, dairy, fish and swine feeds.
Ocean freight costs remain stables and the benchmark freight US Gulf-Japan was indicated at $30/MT; PNW-Japan $16.50; US Gulf-China at $28.75/MT and PNW-China at $15.50/MT. Argentina/Brazil to China freight rates ranged between a high of $31/Mt to a low of $22/MT depending on the tonnage and the discharge.
India maize prices stable, but higher
Indian maize futures on NCDEX for last week of May were down for the 3 contracts while the spot prices in all markets moved up except Gulabbagh, as that is the only location were maize arrivals are strong. Jun contract down 1.20% to Rs.11560/MT; Jul down 1.41% to Rs.11890/MT; Aug down 0.81% to Rs.12230/MT and Sept up 1.78% to Rs.12570/MT. Spot prices iat NCDEX delivery markets in Nizamabad up 0.67% to Rs.12991/MT; Davangere up 0.19% to Rs.13475/MT; Karimnagar up 1.32% to Rs.12833/MT; Sangli up 0.36% to Rs.14100/MT ad Gulabbagh down 0.77%to Rs.11156/MT.
Amit Sachdev, India Representative-U S Grains Council