Posts Tagged ‘USDA’

SUGAR……. “Ambas as extremidades de cana de açúcar não pode ser doce”

In Portuguese language “Ambas as extremidades de cana de açúcar não pode ser doce” means both ends of sugar cane cannot be sweet. Sugar travelling though its notorious cycle has always been continuously gathering news & issues all along these years. Starting with the sugar cycle, it follows a 3-4 years cycle with a bumper harvest resulting in higher inventory levels. Declining prices pressurizes the profits of sugar companies. Going around the downtrend in the sugar cycle starts with increased availability of sugars, decline in sugar prices. This prompts the farmers to switch over to other crops resulting in lower cane production. All these leads to higher sugar prices and the cycle turns around.

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FOREIGN NEWS

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•Mexico published a quota to import 100,000 tonnes of sugar to cover a shortfall in supply until the end of the year.

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•Tight supply supports raw sugar.

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•The US Department of Agriculture (USDA) has pegged India’s sugar production at 23.6 million tonnes, marking an increase of over 26 per cent from last year.

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•Brazil crops shrivel as Amazon dries up to lowest in 47 years.

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•Brazil will harvest 639 million tons in the year started May 1, 3.2 percent less than estimated in April.

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•Australia’s 2010/11 sugar output is being threatened by heavy rain in the northeastern cane growing state of Queensland, disrupting this year’s cane crush.

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•Liffe front-month, December white sugar ends $24.20 higher at $649.80 per tonne after earlier setting a 7-month high for the front month of $661.80 a tonne.

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•Market buoyed by a fresh wave of fund buying and crop concerns in South Africa, Argentina, Mexico and Australia.

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DOMESTIC NEWS

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•Sugar production in Uttar Pradesh, may rise to 6.2 million tonnes from 5.18 million tonnes in the review period.

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•Sugar output in Karnataka is likely to decline marginally to 2.3 million tonnes this year from 2.53 million tonnes last year.

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•Sugar output in Tamil Nadu may jump sharply to 2.1 million tonnes in the 2010-11 crop year from 1.25 million tonnes last year.

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•The output in Gujarat is pegged at 1.3 million tonnes against 1.19 million tonnes last year.

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•Cane growers seek higher prices of 200 rupees ($4.49) per 100 kilograms.

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•NCDEX seeks permission to do futures trading in sugar.

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•The Government has declared lower October sugar quota at 17.50 lakh tonnes (lt) against September’s 19 lt.

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•Sugar imported from India will be tested before its sale in Pakistan, said a minister who rejected the impression that Indian sugar was substandard.

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Seasonality – Indian Scenario

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Analyzing the seasonal index of Indian sugar prices, the prices remain under the pressure till the third quarter of the year. The fourth quarter is a seasonal buying period, as the market witness a recovery because of the festive season.As far as the medium to long-term outlook is considered, the price trends in international markets would be the key determinants of future profitability with the crude oil price trends, which determine the diversion of cane crop to ethanol.

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MUSTARD/RAPESEED SEED

Mustard/Rapeseed oil is the third largest edible oil produced in the world after soy oil and palm oil with accounts of about 12% of the total World’s edible oil production. By crushing rapeseed or mustard seed, oil and meal are obtained. The average oil recovery from the seed is about 33%. The remaining is obtained as cake, which is rich in proteins and is used as an animal feed ingredient. Being an important source of edible oil and feed meal to the country, mustard is undoubtedly the focus of Indian edible oil industry. In EU, rapeseed oil is mainly used for biofuel production.

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Global scenario

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The production and consumption of this oil has been growing at the rate of 4.65% and 5.03% respectively over the last decade. According to USDA, global rapeseed output for 2010/11 is forecast 400,000 tonnes higher this month to 57.1 million as a larger crop in Canada. While world production of mustard oil is estimated to 20-22 million tonnes. Canada is the major producer and exporter of seed and oil followed by Australia. China, European Union, Canada and India are leading producers of mustard seed and consumer as well as. The major seed importing countries are Japan and Mexico and US leads the list of mustard and rapeseed oil importing countries. Global rapeseed exports are estimated 410,000 tonnes higher this month due to lower exports from Ukraine and Russia as record heat wave in August causes crop damage.

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Indian scenario

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The Central Organisation for OilIndustry and Trade, the apex trade body, estimated the country’s mustard seed output at 64.2 lakh tonnes in 2009-10 (October-September) as against 63.5 lakh tonnes a year earlier,
while oil is around 21 lakh tonnes in 2009-10. The country also generates 24 lakh tonnes of oil cake.

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Rajasthan, Uttar Pradesh and Haryana produce the major share of rape /mustard contributing to over 70% of the total Indian produce. The crop accounts for nearly one-third of the oil produced in India, making it the country’s second most important edible oil after groundnut. Mustard oil is consumed wholly in the domestic market. The demand for the consumption of mustard/rape seed comes mainly from eastern and northern areas of the country.


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Hence, India does not export mustard seed but imports some amount of oil. However India exports around 400,000 tonnes of oil cake. Recently due to the dominance of comparatively other cheaper oils like palm and soya, the import share has come down.

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Climatic conditions, especially progress of South-West monsoon is a major factor shaping the fortunes of  mustard seed. Price of other domestic and global oil seeds would also have significant bearing on mustard seed prices. Major trading centres  in mustard seed in the country are Jaipur, Sriganganagar and Alwar in Rajasthan, Hapur in UP, Delhi, Mumbai and Kolkatta.

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Outlook

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The mustard seed futures are likely to trade under selling pressure. Higher warehouse stock, poor buying interest, weakness in soy market, projection of record Kharif oilseeds production due to higher acreage and favorable weather condition is likely keep prices down. As on 13th September, NCDEX warehouses are
having a stock of 123,236 tonnes. Rise in volume, fall in open interest and price is indicating further weakness in the prices.

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Soybean oil….. “Prices sail along with the winds over harbor”

Soya bean oil is the second leading vegetable oil traded in the international markets after palm. Palm and Soya bean oils together constitute around 68% global edible oil trade volume, & Soya bean oil alone constitutes of 22.85% of the whole.

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Soybean Oil World Scenario –A SNAP SHOT

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•World Production: U.S. (38%) is the biggest producer of soybeans followed by Brazil (13-18%) and Argentina (27-37%).

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•World Imports: China, Japan, Mexico, Taiwan and South East Asia are major importers of soybeans while India, China, Pakistan, Bangladesh, South & Central American countries (Peru, Venezuela, Bolivia, Dominican Republic) and Africa (Egypt, Morocco) are major buyers of soya oil in world market.

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•World Exports: U.S. is the largest exporter of soybeans while Argentina is the biggest exporter of soy oil followed by Brazil.

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Hot talks………….. China, the world’s biggest user of cooking oils, and Argentina remain in talks about China’s embargo on imports of soybean oil from the South American nation.

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China imports all its soybean oil almost from Argentina and Brazil. India imports nearly 1 million tonnes of soya oil yearly from Argentina, Brazil and US. India imported 192649 tons of Crude Soya oil during June 2010. According to USDA, the country is estimated to import 1.19 million tonnes of soy oil for 2010-11, while China is estimated to import 2.15 million tonnes during the same period.

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China has frozen all Argentine soybean oil imports in retaliation for Buenos Aires decision to restrict imports of Chinese products. The Chinese blocking of Argentine soybean oil threatens a key hard currency earner for the South American nation, estimated at 2 billion US dollars for the current year.

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Domestic scenario: India is the sixth largest producer of soya oil with account of 4% of world production. In India, Madhya Pradesh produces estimated 53% of the country’s soybean followed by Maharashtra (34%) and Rajasthan (8%). It is sown during June-Jul period and harvested by October in India. The domestic production soyabeen is around 1.4 million ton in 2009-10. Almost 70 to 80% of total oilseed production is crushed for oil while the balance quantity goes for food, feed and seed use in the country.

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So total soya oil production is around 0.7-0-8 million ton in 2009-10, While annual consumption is around 2.0-2.2 million ton with a market value of `9000 crore.

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The above chart shows that during January-June 2010, imports of soya oil totalled almost 7.36 lt against 5.99 lt a year ago. According to the Solvent Extractors Association, the increased imports have resulted in inventories building up at the ports.

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Imports getting surge in December 2009 primarily in view of the kharif oilseeds crop hit by the erratic weather and the rupee’s rise against the dollar.

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Kharif production has been estimated at 161 lt against 178 lt last year. Rabi output, however, is seen marginally up at 101.31 lt against 99.11 lt a year ago.

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Spot markets of Indore and Mumbai serve as the ‘reference’ market for Soya oil prices.

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The prices in Indore reflects the domestically crushed soybean oil (refined and solvent extracted) while Mumbai price indicates the imported soy oil price.

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In exchanges….. Futures trading in soya oil essentially serve as the right tool for hedging against market-linked risk by all those in the value chain of the commodity- the soyabean producing farmers, processors, brokers, speculators, soyabean and meal traders, traders of other oilseeds and oils, etc.

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CBOT is the biggest exchange for soybean oil. In India, NCDEX and NBOT are the major exchanges for these commodities. Its contracts are traded with high liquidity. The domestic future prices of soya oil are largely influenced by the international edible price movements (especially Malaysian palm oil and soybean oil at CBOT), soybean availability in domestic markets, demand for meal and other associated supply-demand factors of soybean and its derivatives.

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Current scenario: Refined soyaoil futures is trading up with August and September contracts moving up by 0.45% and 0.54% respectively. August soyoil futures traded at `484.70 while September futures were at `487.50 per 10kg. Crude Soya oil import price is US$ 880 per ton at Mumbai port whereas Crude Palm oil import price is US$ 805 which indicates the difference of less than 10 percent between the two. There is zero import duty on crude soybean oil in India while it is 7.5% for refined oil.

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MAIZE……… “A-maize-ing”

The changing desires of eating taste have changed the periphery of the cereal. The change of label from “makka” on the road side to “masala corn” or “sweet corn” in the shopping malls across the country, has given an edge to this commodity.

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ACERAGE REPORT – INDIA

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Area, production and yield of maize in India had been increasing for the last five decades and India had reached near self sufficiency in production. “But this year there is a small twist in the story”.

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Maize is grown in both kharif and rabi seasons. According to data provided by industry players, kharif maize output is estimated at 12.5 million tonnes for 2009-10 as compared to 14 million tonnes in the previous year. The rabi season output is estimated at 4.68 million tonnes as against 5.60 million tonnes in the previous year. Overall, maize production in 2009-10 is likely to be 17.28 per cent lower, or 3.41 million tonnes less, at 16.32 million tonnes, from 19.73 million tonnes in 2008-09.

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Punjab: Maize acreage in Punjab is expected to increase by about 1.50 lakh hectares to 2.82 lakh hectare this season. In the last few years, maize is also grown in spring, particularly in the potato belt of the state.

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Haryana: Haryana farmers have increased the corn acreage to 40,000 hectares against the government target of 4000 hectares. This might not have an impact on domestic corn prices for the reason that Haryana is not a major corn producer and acreage in major corn producing states Karnataka and Andhra Pradesh has declined..

Tamil Nadu: Acreage of corn in Tamil Nadu has increased by around 71% till June 7, 2010 compared to last year.

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Andhra Pradesh: Despite of the normal rains in Andhra Pradesh, acreage under maize as on 16/06/10 has reduced significantly. Lucrative returns in other crops like sugarcane, sesamum have attracted farmers to shift corn area into those crops. Area covered under maize in Andhra Pradesh as on 16/06/10 is reported at 8945 hectares compared to the normal area covered till date 31403 hectares..

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On the whole, the total sowing acreage of maize as on 26th June 2010, reduced by 35% to 5.39 lakh hectares due to delayed monsoon in northern and central part of India..

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ACERAGE REPORT – WORLD.

Global maize production was likely to be a record 822 million tonne (MT) in the 2010-11 season, the International Grains Council (IGC) said in its latest report. “The world maize production forecast for 2010-11 is increased by 15 MT to a record 822 MT, up from 807 MT last season, due to improved prospects in US, Mexico and parts of Africa” the IGC report said.

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In its weekly crop ratings report, USDA said 73 percent of the corn crop was in good or excellent condition, down from 75 percent a week before.

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FUNDAMENTAL OUTLOOK

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·Chicago Board Of Trade (CBOT)

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U.S. corn futures market is caught between pressure from expectations for a big U.S.crop and support from uncertainty about weather and Chinese demand. Corn futures headed for the biggest monthly decline in three months as planting advances in the U.S., the world’s largest exporter, boosting expectations that the next harvest may exceed last year’s record. The USDA kept its estimate on the nation’s corn production unchanged at 13.37 billion bushels in the year beginning September, with 88.8 million acres planted, beating last harvest’s record of 13.11 billion bushels.

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·National Commodity Derivative Exchange (NCDEX)

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Maize NCDEX July future prices had seen consolidation in a range of 1010-1025. Recently, the counter making a technical break out, made a high of 1034.50. Despite of the higher acerage reports, the prices have maintained a continuous uptrend journey. Maize futures have given a profit return of about 9% in a span of six months dwelling between both bulls & bears. Most interestingly, the July contract has registered a profit of more than 11.69% within 8 weeks – 48 trading sessions – 336 hours of trade (approx.). Prices maintaining an upright stand & expecting the same with continuous buying from the consuming industries, the cereal is anticipated to make new highs. Maize NCDEX July future prices are in CONTANGO situation as
against June contract.

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Therefore to sum-up, there is a lot’s potential for corn futures supported by the fact of upcoming demand & rising consumption from every corner of the world. The day is not very far for the cereal to be the most “A-maize-thing” amazing commodity on trading platforms, giving their best returns.

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CORN- The Un-discovered Legend Part 2 :)

Hello Friends here we come up with an extension of our previous blog, CORN………. “The Un-discovered Legend” Part 1

🙂

CORN- The Un-discovered Legend Part 2

In previous Blog we had touched upon few points related to importance of Maize crop in Indian commodity market and its relevance in the context of Indian Scenario 🙂

In this blog, we would get to know of Potential sources of demand for Maize crops and industrial demand of maize crop.   Also read about the PVO (Price-volume-open Interest) Analysis of the Crop.

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Potential sources of demand:

The apparent increase in consumption demand has been sourced from the preference for corn based food products for human consumption as well as increased use in feed industries.

Human consumption – corn flakes, corn oil, corn flour, etc.,

Feed industry – poultry & animal feed

Ethanol – maize has already proved to be a potential source of ethanol.

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Corn consumption has seen a rapid growth during last few years.

Indeed, consumption patterns have changed at an accelerating pace especially during the winter season; from the time when it has
been introduced in numerous shopping malls around the world in the form of popcorns, baby corns etc.

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Industrial demand:

This commodity has placed itself in an advantageous position & made its presence felt in the industry.

Maize is a key ingredient in animal feed mix, & being the animal feed sector growing at a healthy pace with increasing demand for
meat and milk and milk products, coupled with stagnation in cattle population, there is a rising need to feed the existing population
of cattle with quality feeding.

Therefore, this has opened a window of opportunity for strengthening of global corn prices, which in turn is triggering enormous
demand for Indian maize in the Asian regions.

With the growing demand & expansion of starch sector, the overall demand for maize is likely to grow at a brisk pace.

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Change in % from 2008-09 to 2009-10 (India) Source: USDA

Area Harvested: 11.44%

Beginning Stocks: 51.72%

Production: 0.10%

Total Supply: 1.60%

Total Consumption: -1.1%

Ending stocks: 12.55%

Total Distribution: 1.60%

These positive figures indicate that India has sufficient & comfortable stocks of maize.

In 2009-10 the area harvested (India) is expected to increase by 11.44%, while the consumption is expected to remain almost flat or marginally down in next year.

The ending stocks are also quite high which can pressurize the prices in long term.

In a monthly update on 10th November 2009, USDA cut the corn forecast by 1 percent to 12.921 billion bushels (328 million tonnes).

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PVO (Price-volume-open Interest) Analysis:

Maize futures have proved the old saying “Slow & steady wins the race”.

The prices, volume & open interest in maize futures both in NCDEX & CBOT which had taken a backseat during the beginning of the
year 2009, have been rising again without much volatility in their behaviour.

The prices have been rising from the levels of Rs.795 to Rs.965 during January to November’09, which resulted into bull-run and resultantly futures made a high of 1015 levels on 3rd November ’09, giving a return of 21% till now.

Since the month of March ’09 prices have been seen rising witnessing some corrections during their journey; however factors like
higher international prices & continuous demand from starch & poultry industries have supported the prices.

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Imposition of Addl. Margin on Turmeric

Hello Friends here we come up with the Latest Agri updates in the country.

Imposition of Addl. Margin on Turmeric

Imposition of Addl. Margin on Turmeric

Imposition of Addl. Margin on Turmeric

As per notification & NCDEX Bye laws, Rules and Regulations of the Exchange, in addition to existing margins, special margin of 10% on long side will further be imposed on all running contracts of Turmeric (Symbol : TMCFGRNZM), effective from the beginning of trading day November 4, 2009.

Thus the total special margin on the long side of all running contracts and yet to be launched contracts in Turmeric shall be 20% with effect from November 4, 2009.

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In Other major Agri Updates we can see that Corn, Soybeans have Dropped as rally to One-Week High may erode Demand whereas Strong Demand has kept Cardamom firm.

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Corn, Soybeans Drop as Rally to One-Week High

May Erode Demand :

Corn and soybeans declined for the first time in three days on speculation that their rally to one-week highs may reduce demand for U.S. supplies.

Wheat climbed. Corn gained 6.6 percent the past two days and the oil-seed rose 3.5 percent after wet, freezing weather delayed Midwest harvests last month.

As well production in the U.S. may be curbed by above factors. USA is the largest grower and exporter of both crops.

The U.S. Department of Agriculture will update its crop forecasts on Nov. 10.

The soybean crop will reach 3.325 billion bushels, less than the Oct. 7 forecast of 3.411 billion, the Linn Group said.

Last month, the USDA predicted a record 3.25 billion bushels, up from 2.967 billion collected in 2008.

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In another Update,

Demand keeps cardamom firm :

The average cardamom prices vacillated between Rs 670 and Rs 710 a kg during last week at auctions held in Kerala and Tamil Nadu and good demand despite heavy arrivals.

In fact, the arrivals at the KCPMC auction on Sunday at Vandanmettu were the highest with 75 tonnes, ever since the commencement of e-auction in December 2007.

Buyers both domestic and export were active.

Around 35 to 40 tonnes of cardamom was bought by exporters. North Indian buyers were covering for their requirements for the winter.

They were actively buying on the apprehension that the prices might go up further in the coming days due to a likely squeeze in supply once the peak harvesting season gets over.

The weighted average price as on November 1, 2009 stood at Rs 681.11 a kg as against Rs 593.83 a kg on the same day last season.

🙂

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