India maize prices up on limited stocks

WASDE report projects higher world production, consumption & ending stocks, no reflection on prices; India maize prices up on limited stocks

USDA brought out the WASDE report on Feb 10, 2015. Though there are no changes in the production of corn in the US, usage has been increased for ethanol production by 1.9 MMT and reduced for feed by 0.653 MMT, which is reflected in a little reduction in ending stocks, which are now estimated at 46.42 MMT.

Overall world corn production is estimated at 991.29 MMT and ending stocks at 189.64 MMT. Higher corn production is estimated in Argentina 1 MMT to 23 MMT; Former Soviet Union (FSU) 1.11 MMT to 43.77 MMT and Ukraine 1.45 MMT to 28.45 MMT. In case of Brazil, ending stocks are reported to be higher due to higher beginning stocks and the same is for South Africa. Corn exports are expected to be up from FSU and Ukraine at 20.84 MMT and 18 MMT respectively. Overall

The reduction in the ending stocks does not reflect much on the prices, which moved up very slightly by the end of the week. Mar contract closed 0.41% up at 152.43 per MT; May up 0.30% to $155.48 per MT and Jul up 0.30% to $158.49 per MT. This did not change the FOB indicated prices were were at $182/MT (Feb) and down to $180/MT (Apr) at US GULF. Prices at PNW were indicated at $196-198/MT for the same period. Argentina corn indicated at $178-182/MT, Brazil at $182-186/MT, Black Sea $172-176/MT and India at $212/MT.

Overall Indian maize prices on futures and spot markets moved up, reflective of the  fact that the arrivals are slow and now the wait is only for the Rabi crop in Bihar. Feb up 4.6% to Rs.12260/MT; Mar up 4.42%to Rs.12520/MT; Apr up 3.45% to Rs.11390/MT; May up 1.72%to Rs.11260/MT and Jun up 3.98% to Rs.11500/MT. Spot prices in ket markets up except in Nizamabad and Gulabbagh where prices were down by 0.25% and 0.5% to Rs.12518/MT and Rs.13317/MT respectively. Prices were up in Davangere by 1.08% to Rs.11750/MT; Karimnagar by 0.20% to Rs.12750/MT and Sangli by 2.40% to Rs.12800/MT. Buying remains subdued, with no pressure, though the end user industries are looking for good quality corn for their use, specially poultry and starch.

DDGS remains a good buy and reflected in the prices. But on the longterm, if the crude prices do move up, ethanol use will be feasible and exports will continue. Also with more corn expected to be used in Ethanol production, expect more DDGS production in the US and higher availability. Current FOB prices (US Gulf) are indicated at $269/MT (Feb), down to $262/MT in April. At PNW the prices are indicated at $266-258/MT. Delivered prices to Vietnam and China were indicated at $325/MT and $308/MT respectively. Corresponding CGM prices were quoted at $752/MT (FOB US Gulf).

Not much change in the Freight rates as they continue to decline and the benchmark US Gulf-japan freight was indicated at $27.5/MT. Similarly PNW-Japan freight indicate at $16/MT. US Gulf-China at $26/MT; PNW-China at $15/MT and Argentine-Brazil to China was indicated at $21/MT (Minimum) to a high of $27.5/MT.       Amit Sachdev