Policies To Control Inflation May Be Actually Stoking The Fire

NEW DELHI: Bulls are running amok in Indian oilseed and corn futures in anticipation of a ban by the government soon. Since Indian contracts are rising at a time when the world market is cooling off, policies to control inflation may be actually stoking the fire in domestic oils and grain futures.

By continuously going long, a clutch of large players have pushed up soybean, rapeseed and corn futures to record highs in Mumbai and Indore bourses even though the international market has dropped significantly.

“At a time when the international market in soybean, rapeseed and corn has dropped, even those who had short positions are now exiting to go long. Obviously they know something that others don’t,’’ said a market watcher in Mumbai.

These local bulls are betting that when the government bans futures in these commodities, it will ask exchanges to settle their contracts on the basis of prices on the last trading session and not prices in the physical market. That would give punters ample gravy for a profit feast.

Ever since the ban on soyabean oil, there has been a bull run in oilseed because speculators are anticipating a similar ban there as well. In the last three weeks, soybean has shot up Rs 2,500/tonne, rapeseed Rs 4,500/tonne and corn Rs 800/tonne.

The market is under such a sway towards one direction that even a crash in the international market has not been sufficient to ensure a correction. On May 29, Chicago Board of Trade soybean contract dropped 5% by 65 cents, or Rs 100/quintal in rupee terms.

CBoT corn also dropped almost 5% in May. In India, however, soya dropped by just Rs 5/qtl on Friday, while corn actually rose Rs 13/qtl. Rapeseed also bucked the international trend by rising Rs 30/qtl on Friday.

“Things have come to such a pass that soyabean October contract for the new crop is now ruling at a record Rs 23,500/t. One reason is the likely increase in minimum support price for soybean. But that can’t explain this rally. The crop is not even sown yet,’’ said a trader in Mumbai.

While the longs are betting on futures getting banned, the shorts are nervous because they know it would leave them with no exit option. So they are staying away from the market. “No one wants to be caught on the short side of the market when the ban comes,’’ said a trader here.

Market watchers say the only way to halt this rally would be for the government to make it clear that if a ban comes, it would not use merely the last traded price for settling contracts.

“The same method was used in soybean oil, rubber and potato this year and urad and tur contracts last year. Only in wheat the government allowed the contracts being traded to run their course. That ensured an orderly exit of players in the market,’’ a source added.

The biggest problem of this bull run has been the growing disconnect between the physical and futures market. No one in the physical market is willing to do deals at prices in the derivatives market. That has disrupted trading significantly, which may further work to the bulls’ advantage.

“The upward spiral in corn has further fuelled demand by poultry and starch industries to ban futures and the strategy appears to be working well. Either way bulls are ensuring the ban comes soon. They are waiting for the government to fall into this trap,’’ a source said.

FMC Said In A Notification Prescribing Guidelines

MUMBAI: Commodity futures markets regulator, Forward Markets Commission (FMC), has said it would seek at least 26% equity in paid up capital by a government company in any proposed national-level exchange.

The FMC said in a notification prescribing guidelines for setting up new commodity exchanges that bourses should be registered as a public limited company with an equity capital of Rs 100 crore.

The notification, posted on FMC web site on Thursday evening, stipulates that institutional shareholders should own at least 20%. Any shareholder having more than 26% stake will have to pare it down to 26% within 2 years beginning with the fourth year of the date of recognition.

Individuals cannot hold more than one per cent of the paid up capital, the notification said. In October, 2007, Indiabulls Financial Services sought FMC’s permission to set up a commodities exchange in partnership with state-run commodities trading company MMTC.

The regulator is yet to grant permission. Indiabulls would hold 74% in a special purpose vehicle (SPV) to set up the exchange and MMTC will hold the rest and two firms would invest a total of Rs 100 crore in equity.

FMC said there is a renewed interest in establishing new national level commodity bourses. Media reports had suggested more Indian companies were planning to set up national level commodity exchanges to grab a pie of the fast growing Indian commodity futures market.

The government, which allowed futures trading in commodities in 2003, has one of the fastest growing commodity futures market with a combined trade turnover Rs 40.7 trillion in FY08.

Meanwhile, commodity bourses have shrugged-off the futures suspension shock to register gains in trade turnover, said a senior official with the FMC. The combined trade of commodity bourses rose 10.2% to Rs 5.1 trillion between April 1 and May 15, over the corresponding period last year, despite a trading suspension on four commodities from May 8.

Food and agriculture minister Sharad Pawar said on Thursday that farmers had not gained from the ban imposed on futures trading in wheat, rice, soya oil, rubber, two varieties of lentils, potato, and chickpea.

Beleaguered Net Food Importing Developing Countries

New Delhi: For the beleaguered net food importing developing countries, faced with the recent record level of prices for almost all agricultural commodities that led substantially to food inflation, the prospects for any respite in the medium to long term are none too optimistic.

This is the broad conclusion of the Agricultural Outlook, jointly prepared by the Organisation for Economic Cooperation and Development (OECD) and the Food and Agriculture Organisation (FAO) of the UN and released in Paris at the 30-member inter-governmental think tank’s headquarters on Thursday.

As world reference prices in nominal terms for all agricultural commodities today remain at or above previous record levels, OECD said this might come down due to the transitory nature of some of the factors behind the recent hikes. However, it adds: “There is a strong reason to believe that there are now also permanent factors underpinning prices that will work to keep them both at higher average levels than in the past and reduce the long-term decline in real terms”.

In the medium term

Providing a synoptic assessment of agricultural markets covering cereals, oilseeds, sugar, meat, milk and dairy products over the span of 2008 to 2017, the report said the underlying dynamics in supply and demand suggest that commodity prices — in nominal terms — over the medium term would average substantially above the levels prevalent in the last ten years.

When the average for 2008 to 2017 is compared with that over 1998 to 2007, it said, beef and pork prices might be some 20 per cent higher, some 30 per cent for raw and white sugar, 40 to 60 per cent for wheat, maize and skim milk powder, more than 60 per cent higher for butter and oilseeds and over 80 per cent higher for vegetable oils.

Despite record wheat and coarse grain crops in 2007-08 and a sustained moderate rise in production thereafter, grain markets are likely to remain tight in the period to 2017, OECD said. The prolific demand for maize arising from the rapidly expanding ethanol segment in the US has profoundly hit the coarse-grain market since roughly 40 per cent of the US’s maize crop could be destined for energy production by 2017, it noted.

Feed demand

Developing countries such as those in South and East Asia, as well as Nigeria and Egypt, would continue to fuel global wheat demand. Saudi Arabia is also projected to become a major importer. The growth in global demand for coarse grains would be driven by heightened feed demand from thriving livestock industries in developing countries. Imports by these countries as a group are likely to grow to 94 million tonnes, representing nearly 75 per cent of the world total, which compares to less than 70 per cent over the base period.

Global rice production could expand by 10 per cent by 2017, fuelled by larger crops in South and South-East Asian countries. As a share of world production, rice trade is likely to fall slightly, indicating a lessening reliance on the global market that is consistent with a return to more stringent self-sufficiency policies in several countries. Much of the expansion in world imports is fuelled by demand in Africa and Asia, with Thailand forecast to account for around one-third of all rice exports.

Bio-diesel production

OECD said emerging bio diesel production would escalate the consumption of domestically produced palm oil in Indonesia and Malaysia and soyabean oil in Brazil at the expense of exports of vegetable oil or oilseeds originating from those countries. On the ethanol front, a number of sugar-producing countries such as the EU, Japan, Malaysia, Indonesia, India, South Africa, Colombia and the Philippines are embarking on renewable energy programmes for use in the transport fuel sector.

As most of them are expected to use molasses or starch sources rather than raw sugarcane juice as feedstock, OECD said molasses-based bio-ethanol production should not impair sugar production in these countries and might even whet further growth in cane and sugar output.

World ethanol production is likely to increase rapidly to reach some 125 billion litres in 2017, twice the quantity produced in 2007. World ethanol prices are likely to exceed $55 per hectolitre in 2009, as crude oil prices rise, but should fall back to levels around $52-53 per hectolitre over the remainder of the projection span as production capacity expands the world over

Sugar Industry In Andhra Pradesh Is In For Bitter Times

Hyderabad: The sugar industry in Andhra Pradesh is in for bitter times. Drop in acreage, rapid decline in volumes of cane crushed by mills, and rising labour costs for harvesting, portend trouble in the coming season.

Painting a rather dismal picture, the South India Sugar Mills Association (SISMA) said even sugarcane farmers were shifting to paddy and corn cultivation, as support price was not attractive.

The State would see a drastic drop of nearly 60 lakh tonnes of cane crushed in the coming season (November-April), as the total acreage is set to decline from the present 1.75 lakh hectares to 1.08 lakh hectares, said N Nageswara Rao, President of SISMA.

In terms of crushed cane, while the figure was 1.75 crore tonnes in 2006-07, it fell to 1.3 crore tonnes in 2007-08. The coming season is expected see a bigger fall, Rao told newspersons, on the sidelines of a meeting of SISMA here on Thursday.

Rao, who is also the Managing Director of NCS Sugars, said, “The sugar industry in the State will be in doldrums next year with all these negative developments. Therefore, the Association has decided to approach the Chief Minister with a set of demands.”

These demands include free seed to farmers, provision of mechanised harvests in view of high labour costs (up from Rs 125 to Rs 400 per labour) and imposition of entry tax, since sugar was freely coming in from Maharashtra, Rao said.

Andhra Pradesh has a total of 37 sugar mills (25 in cooperative and 12 in the private sector), and they have lost nearly Rs 300 crore because of the adverse factors. The mills are not able to pay higher prices to the farmers. In Andhra Pradesh, the price ranges between Rs 1,050 to Rs 1,150 per tonne of cane crushed, he said.

Rubber Prices Continued To Rule Weak

Kottayam: The rubber prices continued to rule weak on Thursday. Declines in international futures hammered the domestic sentiments and RSS 4 slipped to Rs 129.50 from to Rs 130 a kg on Wednesday.

The market made all-round declines mainly on buyer resistance. In fact the firm Bangkok rates failed to catalyse the domestic mood. Most of the traders preferred to sideline the market letting the rates to recover after the steep fall.

Low volumes

There was no panic selling from the producing sector as expected and hence the volumes were low. Major consuming industries were totally inactive during the session.

Spot prices were (Rs/kg): RSS-4: 129.50 (130); RSS-5: 124.50 (125); ungraded: 119.50 (120); ISNR 20: 120.50 (121) and latex 60 per cent: 82 (82).

The International Inventories Of Tea Are At Record Low

Kolkata: The tea market particularly for quality tea will remain buoyant in the next three months because of tight supply position both in international and domestic markets, according to C K Dhanuka, Chairman of Dhunseri Tea & Industries Ltd, and also the past Chairman of Indian Tea Association and Tea Association of India.

Currently, the international inventories of tea are at record low and there is no cushion left with the traders and blenders to bring down the level further. With this tight inventory position, the market has become very sensitive and starts reacting sharply with any short term imbalance (either shortage or excess), observes Dhanuka in a statement.

The lower crops in North India, Kenya and several other producing countries in first quarter of 2008 pushed up the global prices.

The demand for second flush this year, he feels, is going to be extremely strong and price may touch a record high. This will happen because of the additional pressure in demand likely to be from those traders who had maintained lower inventories and also from exporters because of lower crop reported from Kenya.

Global demand

Dhanuka estimates that the global demand for tea will rise by 100 million kg annually for next five years but the supply is unlikely to match the projected increase in demand.

The imposition of minimum quality standard as ISO 3720, MRL (maximum residue limit which relates to the residue of chemicals used in tea plants) etc. as a means of improving of quality of tea will reduce the availability of tea in the world market.

Replantation, rejuvenation of old bushes and producing more of orthodox variety will also affect the production of tea in India.

“It will not be wise to expect 500 million kg or more of additional tea in the global market in the next five years,” Dhanuka adds.

Soaring Prices Of A Range Of Commodities

Mumbai: Soaring prices of a range of commodities — food, energy, metals — have generated a lot of heated debate around the world. Governments are keen to rein in galloping prices and their inability to do so is causing disaffection among the people. The desirability of stubbornly pursuing policies of neo-liberalism is being questioned, especially because the market economy has failed to ensure growth with equity.

In India, too, commodity futures trading has attracted political and commercial attention. The one-point agenda of those in favour of such trading seems to be to expand the number of market participants, augment flow of funds into the market and raise trading volumes. In other words, nothing else really matters.

Greater role

If realised, it is certain to bring tremendous gains to one community — the brokers; and it will also help improve the valuation of some commodity exchanges. Promoters of exchanges are keen to quickly raise the valuations and exit by selling their share. Some have already done so; and others are waiting.

No wonder, commodity traders, the exchanges and even the market regulator are all pushing for greater role for banks, mutual funds and foreign institutional investors in the commodity futures market with the argument that such a move alone will improve liquidity and help discover correct prices.

Belief is now gaining ground that far from bringing any real benefit to primary producers and consumers, allowing those with no genuine interest in the underlying can actually distort the market and thwart the process of genuine price discovery.

Operational weaknesses

Recent developments in the US — the champion of free trade — have further reinforced the view that the role of institutional investors needs to be limited. Indeed, the internal working of the market regulator Commodity Futures Trading Commission (CFTC) is under review and the agency’s operational weaknesses are being identified for rectification.

According to reports, Senator Joseph Lieberman (I-Conn), chairman of the Senate Homeland Security and Government Affairs Committee, said at a hearing recently that he will consider drafting an outline of legislation that would limit the role of institutional investors in commodity markets. He seeks to close what he calls a loophole that allows large investors to circumvent commodity positing limits.

This unbridled growth raises justifiable concerns that speculative demand — divorced from market realities — is driving food and energy price inflation, and causing a lot of human suffering, Lieberman said.

Swap Agreement

The so-called swaps loophole exempts investment banks from reporting requirements and limits on trading positions that are required of other investors. The loophole allows pension funds to enter into a swap agreement with an investment bank, which can then trade unlimited numbers of the contracts in futures markets.

Lieberman said at the end of the hearing, he has concluded that index speculators are responsible for a significant part of commodity price increases that are really hurting a lot of individuals [and] a lot of businesses, and we ought to see if we can do something about that. Lieberman said he will convene another panel of witnesses to examine how to close the swaps loophole, among other ideas for reform, some of which are included in the Consumer First Energy Act of 2008 proposed on May 7 by a group of Senate Democrats.

The excess volatility in recent months in the agricultural commodity futures markets has prompted the CFTC to take several new initiatives in the near future including and importantly improving the oversight of large financial participants such as the hedge funds.

The lack of convergence of the spot market prices with the futures market prices is another area of deep concern. In the absence of such convergence, both producers and consumers are at a loss to know what the real price for the commodity should be.

Domain knowledge

Clearly, even in the US, questions are being raised about the functioning of the market, and systems and practices followed are being questioned. One can well imagine how rudimentary Indian markets are and how poorly they are regulated. In the absence of adequate domain knowledge, the regulatory authority runs the risk of falling prey to glib presentations about the health of the market from those whose only aim is to push trading volumes higher.

Meanwhile, CFTC chief economist has denied that institutional investors were responsible for rising commodity prices, or that excessive speculation exists in those markets. Fundamental factors of demand and supply drive the market up, according to him. However, others have pointed out that even though fundamental factors are important, they cannot explain the phenomenal price rises in recent years.

Urgent need

Opposition to large inflow of funds into a market that was originally meant essentially for commodity producers, consumers and traders to benefit from — in terms of price discovery and price risk management — has once again brought to the fore the urgent need to review the policies relating to this market.

Futures trading has ceased to be genuine hedging mechanism and has become an avenue for investment of funds. With commodities emerging as an asset class, the original intention of starting this market stands defeated.

The benefit to primary producers and large consumers has become suspect. A serious rethink on functioning of the market and making it genuinely work for the stakeholders has assumed great urgency.

Efforts To Tackle Deterioration Of Soil Health

Chennai: As part of its efforts to tackle deterioration of soil health and improve crop yield, the Directorate of Wheat Research in Karnal, Haryana, has come up with diversification of the rice-wheat system by introducing short duration crops such as vegetables and peas between early rice and late sown wheat.

According to Dr B Mishra, Project Director of the directorate, the continuous practice of the rice-wheat system has led to deterioration of carbon in the soil declining to 0.2 per cent from 0.4 per cent and it was affecting production of foodgrains.

“Deterioration of soil health led to fall in microbial population, lack of potash, iron and zince while also leading to toxicity in the soils,” he said, adding that the directorate had launched a vision to blend all good elements for improving soil health and it was beginning to yield results.

“What has happened is that we have developed an alternative pattern where early rice can be followed by vegetables such as potatoes or peas followed by a leguminous crop before wheat is sown,” Dr Mishra said. Planting of leguminous crop would help improve the nitrogen content of the crop, while the directorate was also popularising zero tillage to ensure higher wheat yield compared with conventional tilling.

“We would like farmers to sow vegetable crop after short duration rice before going in for wheat. We would like sowing of wheat to be delayed a bit. Again after wheat is harvested, it would be wise to plant crops such as moong,” he said.

The trial had led to satisfactory results and the directorate had got a mandate to popularise the system in the next five years. “An advantage of this system is that farmers also get an increased income of Rs 30,000-40,000 a hectare. This is because of 20-60 per cent increase in yield, besides the two extra crops,” he said.

On the other hand, zero tillage, which has gained popularity in Punjab and Haryana, would be extended to eastern Uttar Pradesh and Bihar.

Product-based wheat

Meanwhile, the directorate has begun to develop wheat varieties that are product-based. It has so far developed 334 varieties including 292 for making bread that can be grown in different agro-climatic conditions.

“We have also developed wheat varieties that can help produce better quality biscuits. Its breeding is being popularised in five states. The variety’s dough is a spreading one and has different protein and beta carotene parameters,” Dr Mishra said.

Global rust initiative

A research programme “Network project in gene pyramiding for resistance to multiple biotic stresses in crops” is in full swing and it would also help overcome rusts in crops. All functioning of the crop would be controlled by gene development, he said, adding that the directorate had also begun a global rust initiative, wherein wheat varieties with genes that could resist genes would be identified.

The directorate has also developed barley varieties with better malting quality. Besides, barley that can be used as feed and fodder had also been developed, Dr Mishra said.

Rubber Prices Touching New Highs

Mumbai/Kochi: Tyre manufacturers and other user industries of natural rubber complained of lack of the commodity’s availability even as its prices touched Rs 137 a kg. The prices, however, cooled down and ended lower than Monday’s Rs 135 as some growers offloaded their produce.

“The problem of rubber prices touching new highs is one. But importantly, we are not able to get the stocks even at these prices,” said Rajiv Buddhiraja, Director-General of the Automotive Tyre Manufactuers Association, the apex body of tyre manufacturing companies.

“Rubber is not available even at these high prices as people are holding on to their stocks. With prices going up every day, growers are looking for further rise in prices,” said N Radhakrishnan of Cochin Rubber Merchants Association.

Reasons

“The reasons for rubber prices rising to record are galloping global market prices and crude oil prices topping $135 a barrel,” he said.

Sources in the Rubber Board pointed out that the spike in rubber prices was mainly due to low arrivals in the market. While the demand continues to reign high, the supply continues to be low as rubber production dips sharply during the hot summer months due to poor yields from rubber plantations.

Costlier imports

Global prices of rubber are higher than domestic prices, making imports a bit costly. “International prices are Rs 2 a kg higher than domestic prices,” said Radhakrishnan.

“At some point of time, it will make sense to import. Tyre companies may import between 80,000 tonnes to one lakh tonnes,” said Buddhiraja.

Last fiscal, rubber imports were 74,335 tonnes against 89,669 tonnes the previous year. Exports, on the other hand, were around 53,000 tonnes compared with 56,500 tonnes.

Speaking at a function to release the report of Golden Jubilee Year of the Rubber Research Institute of India at Kottayam, the Rubber Board Chairman, Sajen Peter, said there were requests to temporarily ban the exports.

“We suspect that speculators who were in the futures market are now present in the spot market too,” said Radhakrishnan. “Prices are also rising because the industry has resorted to sort of panic purchase,” he said.

Stocks situation

Buddhiraja said though the Rubber Board had projected stocks at around 1.9 lakh tonnes, there was a need to reassess the situation. “However, the tyre companies have enough stocks to take care of production requirements now,” he said.

Rubber production last fiscal has been estimated at around 8.25 lakh tonnes against 8.10 lakh tonnes the previous year.

On the other hand, the sharp spurt in international crude oil prices has taken the price of synthetic rubber to new highs. While earlier it was possible to augment the supply of rubber by increasing synthetic rubber production at short notice that is no longer the case now. Moreover, the carryover stocks are also at low levels.

However, Buddhiraja said tyre companies were now planning a change in the product mix, wherever it was possible.

Meanwhile, tyre manufactures said they were under pressure to increase prices further. Some manufacturers who had hiked prices in April are thinking of another revision as prices of rubber, their main input, touched record levels.

Constraints

“All that we can do is to pass on it to the customers,” said Paras K Chowdhary, Managing Director of Ceat, talking about the about the increasing cost pressure. “But we cannot raise the prices beyond a point since we are operating on a competitive environment. But we will slowly do it. Our margins are under pressure,” Chodhary said.

“The situation is totally out of hand. The future trade ban has not helped bring down rubber prices. It has instead gone up further. The price goes up because there is a fundamental demand – supply gap. There is an acute shortage of rubber globally and domestically,” Chowdhary said.

Rubber accounts for 60 per cent of the input cost for tyre makers. They consume nearly 4.9 lakh tonnes of rubber a year.

“We are particularly hurt as crude price, transport cost and wages also have gone up. There is very little we can do about it,” Chowdhary said.

There are now reports that the tyre manufacturers are in talks with the original equiment (OE) manufacturers on price revision.

The tyre prices remained constant for more than a year for the OE supplies, while prices in replacement market moved up by 7-10 per cent in the last one year.

Short-term outlook

The firm price trend is likely to continue as rubber tapping is not pursued during heavy rains in the months of June and July. The production and arrivals begin to pick up only by early August. So, the prices are not likely to come down in the short-run, sources in rubber trade said.

There is no way that natural rubber production can be jacked up overnight since there is a long gestation period of several years between planting and tapping of rubber trees.

Concept Of Forward Trading Is A Western One

Coimbatore: The concept of forward trading is a western one and it may not work in Indian conditions where majority of farmers do not possess holding capacity to derive benefit from forward trading, the National Egg Coordination Committee (NECC) has said while urging the Centre to withdraw futures in maize and soya.

The committee, a known opponent to commodity futures trading, has blamed it for the unbridled rise in the prices of maize and soya – the two key commodities widely used in poultry feed manufacture.

The NECC, in a communication to the Union Government, has pointed out that the system of forward trading may work in developed economies such as the US where the farmers by virtue of their large holdings do enjoy capacity to hold foodgrains. But the same is not the case in India where majority of maize or soya growers are marginal farmers and do not have the capacity to hold their produce and they sell away their harvest at low prices to the traders who taking advantage of the forward trading to jack up their prices.

Poultry farmers were hit by the “unprecedented” increase in the maize and soya prices in the past two years and the maize which was ruling in the price band of Rs 500-525 a quintal rose to Rs 900 and in some places the price has gone up to Rs 1000. Soya meal prices more than doubled from Rs 7000-8000 a tonne to Rs 19,000. This is despite the increase in the domestic production of maize this year to 16.8 million tonnes from last year’s 14 million tonnes. The main reason for the price increase is the speculative trading provided by the forward trading.

Due to the steep increase in the poultry feed ingredient prices, the egg production cost has increased in the last 12 months from 90 paise-Re 1 to Rs 1.80/Rs 1.90 per egg and in the case of broilers, it spurted from Rs 27-28 a kg to Rs 40-41. Poultry farmers are continuously losing and unless the situation is remedied, 50 per cent of the poultry industry would be wiped out, NECC said. It also wanted the export of these commodities be streamlined by canalising the commodities exports through a government designated agency

Asian Rice Prices Have Almost Trebled

Asian rice prices have almost trebled to their highest ever this year and prices on the Chicago Board of Trade rose by as much as 80 per cent as export restrictions by leading suppliers fuelled insecurity over food supplies. Also in the news

With only 30 million tonnes traded annually, government supply curbs, such as those from India and Vietnam, have spooked importers, such as the Philippines and Bangladesh, at a time when global stocks have halved since 2001.

While benchmark Thai prices remain above $1,000 tonne, US rice futures have fallen from their peaks as panic subsides, bigger crops come to market and some nations show signs of relaxing their export bans.

Export curbs:

October 2007 - India, which was the world's second-largest rice exporter last year but is set to lag behind Thailand and the United States this year, bans exports of non-basmati rice to rein in prices and control inflation, but later in the month eases the ban on some superior varieties of the grain.

March 2008 - India bans exports of non-basmati rice again as inflation hits a 14-month high, alarming policymakers.

March 2008 - Egypt bans rice exports from April 1 to October to hold down local prices. The country normally produces about 4.6 million tonnes a year of white rice, leaving a domestic surplus of about 1.4 million tonnes for export.

April 2008 - Vietnam extends a ban on rice sales until June to help stabilise domestic food prices as it tries to tame double-digit inflation. Prior to that, it had curtailed exports for March and April.

April 2008 - Brazil temporarily suspends rice exports to safeguard domestic supply and keep prices of the basic foodstuff stable. Brazil, which is not a major global rice supplier, exported 313,000 tonnes of rice last year.

April 2008 - Indonesia, Southeast Asia's largest rice consumer, says it will curb medium-grade rice exports to combat inflation. Under Indonesia's new rice export rules, state procurement agency Bulog is allowed to sell medium-grade rice overseas only when national stocks are above 3 million tonnes and domestic prices are below a government's target price.

April 2008 - India slaps export taxes on basmati rice, on top of an existing ban on non-basmati rice exports.

May 2008 - Bangladesh bans non-aromatic rice exports.

May 2008 - Cambodia becomes the first rice exporter to lift an export curb, which it had put in place two months ago, saying domestic stockpiles were sufficient and that it was short of long-term storage space. Vietnam also talks about ending its export ban from July, as planned.
Why have prices risen?

Myanmar cyclone

A cyclone sweeps through Myanmar's Irawaddy delta, inundating rice crops and raising the prospect that the country may need to import from its neighbours. While years of military misrule have seen Burma slip far from its post-independence position as the world's biggest exporter, the UN's Food and Agriculture Organisation said it had been looking for 600,000 tonnes of rice exports from Myanmar this year.

Scramble to build stocks

January 2008 - Bangladesh signs deals and starts importing 180,000 tonnes of white rice from neighbouring Myanmar. The Bangladeshi government and private traders started importing rice after crop losses caused by flooding last year.

March 2008 - The Philippines says it aims to import up to 2.2 million tonnes of rice this year to meet a domestic shortfall, in what could be the biggest overseas purchase of the staple in a decade. Local harvests have failed to keep up with expanding population, lifting inflation to a 16-month high.

March 2008 - Costa Rica expects its rice imports to jump 31 per cent to 190,000 tonnes in the 2008/09 crop year, which begins in July, as farmers replace some rice fields with other crops such as sugar cane and pineapple. Bad weather in the remaining rice-growing areas also has cut yields.

March 2008 - Bangladesh says it would import 400,000 tonnes of rice from India to cushion the country's dwindling stocks. The imports, allowed under a government-to-government deal, would not be subjected to the rise in rice export prices.

April 2008 - Singapore says it would allow rice importers to bring in more stock to meet increased demand amid consumer fears of a rice supply crunch and higher prices.

May 2008 - Mexico says it will eliminate import tariffs on foods including rice, which currently stand at 20 per cent.
Falling world inventories

World inventories have fallen by nearly 50 per cent from a record high of 147.1 million tonnes in 2000/01, although they have already recovered slightly from a low in 2004/05. They are expected to rise marginally by the end of this crop year.

Speculative buying

On the Chicago Board of Trade, financial speculators looking for the next big commodity play helped lift prices by about 80 per cent to a record high in April. But talk of a record harvests spurred by high prices, and the likely ending of export curbs, sees US rice futures give up half their gains for the year.

Diversification of land use

In some countries such as the Philippines, production is failing to keep up with demand because paddy land is being overtaken for industrial development, or because farmers are seeking other trades. This is a longer-term issue that should contribute to supply tightness in the future.

Vietnam and the Philippines have both moved recently to curb conversion of farmland to other uses.

Growing demand

In poor nations facing a doubling in wheat and corn prices, rice consumption is rising, but this is partly offset by falling per-capita consumption in big countries such as China. Data from the US Department of Agriculture shows that consumption in China -- which accounts for 30 per cent of world consumption -- has fallen by 3.9 per cent over the past five years. But global consumption has risen by 2.7 per cent over the same period, in places such as Nigeria, the Philippines and Bangladesh.

Tea Prices Have Increased

Coonoor: Tea prices have increased in all the auction centres across the world except Jakarta in the first quarter of calendar 2008 over the same period last year, an analysis of market reports from various auction centres indicates. Sri Lankan teas continued to fetch the world’s highest price. Between January and March 2008, prices averaged $3.04 a kg at Colombo auctions. This was 80 cents or 35.71 per cent more than January-March 2007. In dollar terms, no other auction centre posted this much increase. In percentage terms, this was the second highest, next to Chittagang.

Kenyan teas fetched the second highest price in global trade. In the first quarter of the current calendar, price at Mombassa auctions averaged $2.19 a kg. This was 53 cents or 31.93 per cent more than last calendar. In dollar terms, this was the second highest increase among all auction centres

India trend

Indian teas fetched the world’s third largest price average of $1.64 a kg — that is, 28 cents or 20.59 per cent more than last calendar. Of them, prices at North Indian auctions rose 34 cents (23.94 per cent) to reach $1.76. Prices at South Indian auctions increased 18 cents (14.63 per cent) to touch $1.41.

Indonesian teas ranked next in price average. At Jakarta auctions, prices averaged $1.43 a kg. This was 8 cents or 5.3 per cent lower than last calendar. This was the only auction centre to have posted a lower price average this calendar. Bangladesh teas fetched the next highest average price.

Union Govt.Will Announce Much-Awaited Minimum Support Price (MSP)

Hyderabad: The Union government would announce the much-awaited minimum support price (MSP) for paddy for this kharif season soon. Talking to newspersons on the sidelines of a national conference of the Ministers of Agriculture here on Monday, Sharad Pawar, Union Agriculture Minister, said the government would, in all likelihood, announce the MSP on May 29 or 30. He hinted that the MSP would be higher.

Pawar asserted there was no question of import of wheat as the stocks position was good. “Last year, the procurement was 111 lakh tonnes as against a requirement of 140-150 lakh tonnes. This year, we have already procured 210 lakh tonnes as against the target of 150 lakh tonnes, with Punjab contributing 80 lakh tonnes and Haryana 40 lakh tonnes."

Rice procurement

The situation on the rice front too was satisfactory, with a total procurement of 246 lakh tonnes as against the required 270 lakh tonnes. With one more month of procurement still to go, the country expected to procure more. “We have been getting calls not just from our States. We are getting calls from the neighbouring countries like Sri Lanka and Bangladesh and some African countries. We expect that we could help them out,” he said.

State schemes

Asked about the appeal of States to increase additional rice to support subsidised rice schemes, he said though the Government was not against such schemes, it was up to the States to take care of the additional burden. He made it clear that the States should bear the extra cost in case they needed rice to support their schemes.

Pawar said the issue price of commodities distributed through the public distribution system had not gone up despite the increases in procurement costs. “It is time to think over it. We need to discuss it,” he said.

Pulses, oil output

Earlier, addressing a seminar, Pawar pegged the requirement of pulses at 19.11 million tonnes by 2011-12. He said the country needed to evolve a strategy for increasing pulses production and productivity.

The self-sufficiency levels of vegetable oils had fallen to 60 per cent now from 98 per cent in 1997-98. By 2015, the requirement of vegetable oil in the country would be 18.3 million tonnes that was equivalent to 55 million tonnes of oilseeds to meet the domestic demand. He said climate change had posed serious challenges to the country. Quoting experts, he said Haryana and Punjab would be impacted most in the years to come.

“Following the recommendations of CACP, the Centre should give Rs 1,000 a quintal for paddy,” the AP Minister for Agriculture, N Raghuveera Reddy, told Pawar after the conference of Agriculture Ministers held at National Academy of Agricultural Research Management (NAARM). Pawar reportedly assured Reddy that the Centre was convinced that the paddy farmers deserved a higher MSP. “It might trigger the price of rice in the open market. But we need to encourage farmers to grow paddy. Or, we will be forced to import rice,” sources said, quoting Pawar.

Pawar is likely to meet Dr Manmohan Singh, the Prime Minister, and P Chidambaram, the Finance Minister, on May 29 to discuss the issue.

Cotton Production Outlook For The Next Season

Chennai: Cotton production outlook for the next season (August 2008-July 2009) has been kept unchanged at a record 330 lakh bales (of 170 kg each). According to Cotlook, the production estimate is against this year’s 315 lakh bales.

Second largest porducer

This also means for the third consecutive year, India will be the second largest cotton producer in the world, having overtaken the US three years ago.

Still, it will be nowhere near China’s projected production of 450 lakh bales, up marginally from this year.

Cotlook, reviewing its production estimated from April, sees lower production in Africa Franc zone and others by nearly 75,000 tonnes.

The significant feature of next year’s cotton production outlook is that the over one million tonnes fall in the US output is set to be offset by countries such as Australia, Pakistan, Brazil and Africa Franc zone.

Australia, in particular, is set to nearly treble its output to 3.4 lakh tonnes from 1.26 lakh tonnes this year.

Global production

Global cotton production for next season is now estimated by Cotlook at 25.18 million tonnes (mt) against last month’s projection of 26.26 mt and this year’s 25.57 mt.

Subsequently, Cotlook also sees global consumption declining by 59,000 tonnes next year to 26.25 mt against initial estimates of 26.31 mt and last years 25.99 mt.

That will lead to the carryover stocks declining 1.06 million tonnes from the earlier projection of 1.04 mt.

This year, the stocks are expected to decline by 4.18 mt.

Consumption

On the consumption side, Indian consumption is seen increasing to 430 lakh bales up from 419 lakh bales this year. China’s consumption is expected to increase to around 640 lakh bales from 627 lakh bales this year. On the other side, offtake in the US is projected to decrease to 9.36 mt from earlier estimated of 9.58 mt and last year’s 10.01 mt.

Stating that planting was nearing completion in the Northern Hemisphere, Cotlook said, however, weather, especially the approaching south-west monsoon into India would hold the key.

Sugar Companies Reeling Under Margin Pressure

New Delhi: The bagasse-based cogeneration option, which started as a cost-saving measure by sugar companies when the industry was reeling under margin pressure a few years ago, is fast turning into a money-spinning option.

Co-generation is the concept of producing two forms of energy from one fuel, of which one is heat and the other may be electricity or mechanical energy.

Sugar producers across the country, who are fast shifting to bagasse-based generation option to meet captive power needs, are increasingly exporting surplus to the grid from their plants and claiming CDM (Clean Development Mechanism) benefits in return.

Among manufacturers exploiting the cogeneration option, DCM Shriram Consolidated Ltd (DSCL) is ramping up its bagasse-based generation and exporting surplus power to the tune of 27.5 MW to the Uttar Pradesh Power Corporation Ltd (UPPCL) and getting CDM benefits in return.

Sri Chamundeswari Sugars is building a 26-MW cogeneration plant at its factory in Karnataka, of which 18 MW will be an exportable surplus to the State-owned utilities.

The Deoband Bagasse Cogeneration Power project is exporting surplus electricity to the tune of around 20 MW to UPPCL.

Eyeing contracts

Global power equipment major ABB is among the majors eyeing contracts for supplying the automation systems and electrical balance-of-plant to upcoming cogeneration units.

In case of bagasse-based cogeneration plants, power comes from burning bagasse, the fibrous residue remaining when sugarcane is crushed to make sugar.

“The cogeneration system needs to be encouraged in the overall interest of energy efficiency and also grid stability. A significant potential for cogeneration exists in the country, particularly in the sugar industry,” a Central Electricity Regulatory Commission (CERC) official said.

With conservative estimates suggesting a potential of over 20,000 MW power from co-generation in India, the CERC has now directed state regulators to promote arrangements between co-generator unit owners and distribution utilities for purchase of surplus power from such plants.

With spiralling prices of fossil fuels translating into higher captive power generation costs, manufacturers with sugar or rice mills, distilleries, petrochemical plants, besides fertiliser, steel, cement, paper and aluminium units, are increasingly shifting to the cheaper co-generation option.

Price variation

DCSL, which has a bagasse-based cogeneration capacity of 70.5 MW currently, is adding another 24 MW during the current fiscal.

The viability of bagasse-based generation, Ajay Shriram, Chairman and Senior Managing Director of DSCL, said, “depends upon the prevailing sale price of bagasse in the market. Unlike coal and oil, the price of bagasse varies widely from season to season. However, against oil, the price is likely to remain competitive always but against coal it may not. With CDM benefit, the viability improves… DSCL has gone into cogeneration for export in a big way due to the existence of CDM benefit.”

DSCL received its full claim of Rs 1.34 crore during the last financial year.

India is expected to add 1,200 MW bagasse-based power capacity during the ongoing Eleventh Plan period.

This would be nearly twice the 750 MW added during the Tenth Plan. India, which is among the largest sugar producer in the world, generates nearly 40 million metric tonne (MMT) of bagasse, most of which is now finding use as a captive boiler fuel.

Govt. Allowed Export-Oriented Units (Eous) To Sell More ‘Instant Tea’

New Delhi: In a boost to the domestic tea vending industry, the government has allowed export-oriented units (EoUs) to sell more ‘instant tea’ in the domestic market to meet the growing demand in the country.

There is a strong demand for instant tea due to increased consumer preference for convenient, instant food and beverage products.

The Commerce Ministry has now increased the cap on EoU sales of ‘instant tea’ in the domestic tariff area (DTA) from the existing 20 per cent of free-on-board value of exports to 30 per cent. This will improve availability of ‘instant tea’ for tea vending industry, which has been importing (instant tea) from Sri Lanka and other foreign markets, say industry players.

So far, instant tea has largely been exported by tea majors including Tata Tea, Hindustan Unilever and Nestle.

The ‘instant tea’ exports have recently seen some slowdown due to a decline in export orders on account of the appreciation of the rupee against the dollar.

However, the domestic tea vending industry, valued at about Rs 400 crore, has been growing at 35 per cent compounded annual growth rate (CAGR) in the recent years, say industry observers.

“This is a progressive step. It will not affect the domestic tea industry as EoUs are still not permitted to sell tea (instant tea excluded) in the domestic market. The tea growers will continue to be protected. The cap should have been raised to 50 per cent as available for a number of products,” industry sources said.

In fact, seeing the growth prospects for this industry and also its employment creation potential, the Finance Minister, P Chidambaram, had in Budget 2008-09 announced full excise duty exemptions on tea/coffee pre-mixes.

Currently, EoUs are permitted to sell up to 50 per cent of their free-on-board (f.o.b.) value of exports in the DTA. There are, however, exceptions to this norm. The EoUs are not allowed to sell motor cars, tea (excluding instant tea) and alcoholic beverages in DTA.

Zinc Futures In MCX May Remain Bearish

Mumbai: Zinc futures in MCX may remain bearish, despite the recent devastating earthquake in China.

According to the International Lead and Zinc Study Group, the global zinc production exceeded the demand by 72,000 tonnes in the first quarter of 2008. The world refined zinc usage in the quarter dipped 2.76 million tonnes (mt) from 2.79 mt a year ago, while the output remain stable at 2.84 mt.

In 2008, production is forecast to increase 6.47 per cent to 12.06 mt while the consumption likely to increase 4.7 per cent to 11.85 mt.

China factor

New mines that are expected to commence production this year include Sotkamo in Finland (capacity of 60,000 tonnes a year) and Penasquito in Mexico (1.35 lakh tonnes).

The demand for zinc in China is expected to take a beating on the back of economic slowdown.

According to the World Bank reports China is estimated to grow at 9.4 per cent in 2008, against 11.4 recorded in 2007.

The overall decline in China’s economy may lead to reduced zinc consumption and can further dampen the zinc prices.

China is the world’s largest producer of both mine (28 per cent of world production in 2008) and refined zinc (34 per cent).

The loss of zinc smelting due to the earthquake is about 3.5 lakh tonnes and production is expected to be down by around 20,000-30,000 tonnes, which is less than 1 per cent of China’s total output.

China’s investment in lead and zinc smelting sector surged by 126.43 per cent year-on-year to $40.80 million in the first two months of 2008, while in the lead and zinc mining sector it fell 12.26 per cent to $13.42 million, according to China Nonferrous Metals Industry Association.

Major projects

Major zinc projects that are coming on stream by the third quarter include Shaanxi Dongling Group’s 80,000-tonne zinc smelter, Yuguang Lead and Gold Group and Zhuzhou Smelter Group 1 lakh tonne each. The capacity expansion projects are likely to increase China’s refined zinc output by about 3 lakh tonnes to 4.05 million tonnes this year.

Tobacco Prices In Andhra Pradesh Touched A New High

Guntur: On an upward swing all the time, tobacco prices in Andhra Pradesh touched a new high of Rs 140 a kg on all the five auction floors in the northern lights soils of West Godavari on Friday, the highest price ever realised for the crop on the floors.

According to sources in the Tobacco Board, till Friday roughly 139 million kgs of tobacco had been sold in the State at an average price of Rs 80 a kg and the maximum price recorded was in West Godavari, with tobacco fetching Rs 140.40 a kg.

According to Y Sivaji, President of the Andhra Pradesh Tobacco Growers’ Association, the maximum prices could be realised on the floors in West Godavari district as the farmers remained united and thwarted the trade’s attempts to depress prices.

“The system of ceiling prices has been abolished in West Godavari and in the case of two or more bidders bidding the same amount for a bale, the lottery system has been introduced. However, on the southern floors the system of fixing a ceiling price is being continued. It should be dispensed with,” he said.

On three auction floors in the State, the auctions have come to an end and at the present rate by June 15 or so the remaining tobacco (25-30 million kgs) may be sold off.

E-auction

On an experimental basis, the Tobacco Board is planning to introduce the electronic auction system. It is being introduced at Jangareddigudem in West Godavari in the first week of June. The Union Minister of State for Commerce, Jairam Ramesh, is expected to inaugurate it.

According to the Minister, e-auction is the solution to many of the gaps in the present system. It will address the deficiencies and result in better floor prices for farmers, he believes.

Spot Rubber Rates Flared Up Sharply

Kottayam: Spot rubber rates flared up sharply creating another life time record on Friday.

Heavy gains in global markets especially TOCOM which regained strength followed by short covering and bulls’ buying after a weak opening kept the domestic buyers under pressure during the day.

RSS 4 closed at Rs 127.50 against Rs 124.50 a kg after hitting an intraday high at Rs 128 a kg on late trading. Supply shortage has been yet another concern in the main marketing centres.

Certain major manufacturers were buyers on sheet rubber up to Rs 127 a kg but they failed to collect the raw material at those levels.

“Nobody appeared to be willing to sell their stocks may be on even higher expectations,” an observer said. “Speculative elements are still powerful and they are taking undue advantages of the increase in crude oil prices everyday”, said N. Radhakrishnan, President, Cochin Rubber MerchantsAssociation.

RSS 3 improved its May contract to ¥325.9 (Rs 134.53) from ¥317.2, June to ¥326.3 (318.5), July to ¥327.2 (318.4), August to ¥327.8 (318.5), September to ¥328.4 (319.2) and October to ¥330 (319.6) a kg at TOCOM. The grade (spot) closed higher at Rs 132.79 (131.22) a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 127.50 (124.50); RSS-5: 124 (122); ungraded: 118.75 (117.50); ISNR 20: 120.50 (119.50) and latex 60 per cent: 82.50 (82.50).

Spot Rubber Made Handsome Gains

Kottayam: Spot rubber made handsome gains to settle at another lifetime high on Thursday.

Covering groups and purchase agents remained moderately active during the session procuring the sparse arrivals to maintain the prices at higher levels. Sheet rubber RSS 4 improved to Rs 124.50 from Rs 123 a kg amidst bad volumes. There were no fresh quotes from the tyre sector, sources confirmed.

RSS 3 moved up further to Rs 131.22 (Rs 130.01) a kg (spot) at Bangkok. The grade’s May contract improved to ¥317.2 (Rs 131.87) from ¥315.3, June to ¥318.5 (Rs 316.1), July to ¥318.4 (Rs 315.9), August to ¥318.5 (Rs 316.6), September to ¥319.2 (Rs 317) and October to ¥319.6 (Rs 316.9) a kg at TOCOM.

Spot prices were (Rs/kg): RSS-4: 124.50 (123); RSS-5: 122 (120); ungraded: 117.50 (116.50); ISNR 20: 119.50 (118.50) and latex 60 per cent: 82.50 (82.50).

Union Govt Has Sanctioned Rs 122 Cr For Replanting And Rejuvenation Schemes

Kochi: The Union Government has sanctioned Rs 122 crore for cardamom replanting and rejuvenation schemes in the next four years, according to V.J. Kurien, Chairman, Spices Board.

Of the total amount, Rs 50 crore will be spent in Kerala this year. The main purpose of the programme is to increase the production from 9,500 tonnes to 24,000 tonnes, he said at a press meet. The Board is also working out various schemes to market cardamom both in domestic and export markets.

The Board will also explore the possibility of utilising the neutraceutical properties of cardamom as part of the marketing strategy, he said.

Export volume down

The major markets for cardamom are Saudi Arabia, Malaysia, Japan and the UK. The exportduring 2007-08 has been 500 tonnes valued at Rs 24.75 crore (650 tonnes valued at Rs 22.36 crore), registering an increase of 11 per cent in value terms. However, the export volume has declined by 23 per cent.

The reported production decline in Guatemala, which controls more than 90 per cent of the global trade, has resulted in sharp increase in the prices of cardamom, he said.

Incentive for vanilla

According to the Chairman, the Government had also sanctioned Rs 4.5 crore to meet the price difference between natural and synthetic vanilla. This will provide an incentive to encourage the use of vanilla, he added. The export of vanilla has gone up from 125 tonnes in 2006-07 to 200 tonnes in 2007-08. However, the export value has gone down by 11 per cent owing to the decline in the prices in the international markets.

Madagascar, the largest producer is supplying the material in the range of $18-20 a kg. The supply from other producing countries such as Uganda, Papua New Guinea, has pull down the prices in the international market. The major markets are the US, Germany and France.

Chilli Futures In NCDEX Hit The Upper Circuit Of 4 Pc

Mumbai: Chilli futures in NCDEX on Thursday hit the upper circuit of 4 per cent at Rs 5,203 a quintal in anticipation of shortage of best quality stock and rising demand.

Jeera gained 1.70 per cent at Rs 11,615 a quintal on improved export demand. Barley was up 1.68 per cent at Rs 1,303 a quintal on account of firm Jaipur spot market.

Sugar gains

Sugar and mustard seed rose 1.67 per cent and 1.45 per cent to Rs 1,457 a quintal and Rs 635 per 20 kg.

Guarseed and gum fell marginally by 0.96 per cent and 0.8 per cent at Rs 4,554 a quintal and Rs 1,865 a quintal on good progress of monsoon.

Cocud shed 0.64 per cent to Rs 447 per 50 kg on steady spot markets. Castor seed and pepper dipped 0.47 per cent and 0.41 per cent at Rs 529 per 20 kg and 15,259 per quintal.

Cardamom on MCX was up 0.84 per cent at Rs 664 a kg.

MCX recorded a turnover of Rs 8,856 crore up to 5 pm on Thursday.

India Has Purchased 20.5 Million Tonnes Of Wheat

New Delhi: India has purchased 20.5 million tonnes of wheat in 2008 from local farmers and is within sight of a record wheat buffer stock this year, the chairman of Food Corp of India, Alok Sinha, told Reuters on Thursday.

A likely record crop of 76.78 million tonnes in 2008, a result of better seeds and favourable weather conditions, have helped the government build large buffer stocks at a time it is battling inflation ruling at 3-½ year highs.

"In all likelihood, we will cross our previous record tomorrow. We expect to buy a total of 21.5 million tonnes wheat this year." he said.

Food Corp of India is the country's main grain procurement agency.

Depleted buffer stocks forced India to order expensive imports of 7.3 million tonnes over the last two years, and tenders floated by the world's second-biggest consumer helped global prices soar.

Global Sugar Market Has Been Rather Dormant

Mumbai: The global sugar market has been rather dormant for sometime now, with the underlying weakness preventing hectic activity. For 2007-08, the market is clearly in surplus; there is simply too much sugar and few takers.

Large carryover in two of the world’s largest producers – Brazil and India – as also weak demand from even traditionally large importers such as Russia has merely added to the woes of the market.

But there are indications that the large surplus may soon give way to a more finely balanced market in 2008-09. This surely will have implication on the world sugar prices. Once again, the situation in Brazil and India needs to be watched carefully.

Cane output

In Asia, both India and China are most likely to harvest smaller crops.

On the other hand, the size of Brazil’s cane output is expected to reach 490-500 million tonnes (mt). Even if a larger part of cane is diverted for ethanol (driven by high energy prices), the country would still produce more sugar in 2008-09.

The incremental output is currently estimated at 2 mt. In other words, enough cane would be available in 2008-09; but the key to sugar market dynamics is to know how much cane would Brazilian millers utilise for ethanol and how much for sugar.

Ethanol parity level

In order to ensure that Brazilian millers maximise ethanol output and are not tempted to increase sugar production (beyond say 2 mt), sugar prices need to remain below their ethanol parity level, according to experts. However, some support for the market could come from an increase in Brazilian gasoline prices, which would increase the level to which sugar prices can rise without becoming more attractive than ethanol.

Similarly, enhanced opportunities for ethanol exports to the US and the EU will also encourage ethanol output, thereby, providing some relief to the sugar market, experts added.

For 2008-09, it is tentatively estimated that the world sugar production may decline by around 6 mt (raw value) in the wake of smaller crops in Asia, in general, and anticipated downturn in India and China, in particular. Consumption, on the other hand, is expected to continue to grow by around 1.7 per cent. This will surely leave much smaller surplus of about 2 mt in 2008-09 against about 10 mt in 2007-08.

Domestic situation

For 2007-08, sugar production is expected to be a record 27-28 mt, with comfortable availability of cane (340 mt). Trailing domestic consumption means there is a huge surplus, a part of which the country is seeking to dispose of in the export market. The volume of Indian sugar exports will depend not only on international prices but also on domestic prices. While international prices are weak, domestic market has improved recently, making exports so much less viable. A firmer rupee too, has not helped in recent months, although lately the rupee has weakened from levels three months ago.

Cut in area, output

With the crushing season expected to slowly grind to a halt, the market has already begun to look at the next season.

Planting numbers suggest a reduction in crop area and a sharp decline in cane output that would be ready by October-November 2008. Some forecast put the decline in crop size by as much as 20 per cent. The emerging situation is fraught with possibilities.

Monsoon & festivities

Although the Government has released a part of the buffer stock to dampen prices, the onset and progress of southwest monsoon will have a bearing on prices. A series of festivals during August-October would increase sugar consumption manifold. Importantly, on current reckoning, the prospects for the next crop are none-too-bright.

In this emerging scenario, sugar prices are most likely to surge in the coming months from the current level of around Rs 1,550 a quintal in the wholesale market.

With elections round the corner, the government would be hard pressed to contain prices. Despite current surplus, restrictions on sugar exports cannot be ruled out.

Mills and traders will continue to build inventory in anticipation of a rising market. Consumers will have to brace themselves to pay a higher price for their favourite sweetener.

RM Seed Futures In NCDEX On Wednesday Gained

Mumbai: RM Seed futures in NCDEX on Wednesday gained 2.35 per cent at Rs 626 per 20 kg as the arrival season nears an end.

Going by recent rally, there is a possibility that farmers may be holding back their produce in anticipation of further rise in prices, said an analyst.

Soyabean was up 1.71 per cent at Rs 2,377 per quintal on speculative buying. Pepper futures rose 1.42 per cent at Rs 15,327 per quintal. Cocud was up 1.06 per cent at Rs 450 per 50 kg as cotton and edible oils prices were marked up. Sugar regained by 1.06 per cent at Rs 1,432 a quintal on short covering after the recent fall.

Castorseed dips

Castorseed fell 1.39 per cent at Rs 530 a 20 kg on higher arrivals in spot markets. After hitting a high of Rs 3,796 per quintal, turmeric ended the day with a loss of 0.61 per cent at Rs 3,730 per quintal on account of profit taking.

In MCX, cardamom futures shed 0.68 per cent at Rs 658 a kg on profit booking.

MCX recorded a turnover of Rs 6,132 crore up to 5 pm, while it was Rs 2,129 crore in NCDEX on Wednesday

Worldwide Physical Demand For Gold

Mumbai: Not unexpectedly, worldwide physical demand for gold (jewellery, coins and bars) suffered a setback in the first quarter of 2008, with volume down 16 per cent to about 701 tonnes.

In dollar denominated value terms, demand for the yellow metal reached $20.9 billion, up by a fifth from the corresponding period last year; and more than double the level four years ago.

Going by early indications, jewellery demand is likely to remain muted in the second quarter, a spokesman for World Gold Council (WGC) said at the time of Gold Demand Trends’ first-quarter report release.

With unsettled conditions in financial markets continuing and inflation catching up, gold continues to be buffeted by uncertainties.

Yet, its traditional role as a hedge against inflation and safe haven investment has ensured continued investor interest.

Unusual volatility

The fall in physical buying in the first quarter represents the lowest quarterly figure for five years, WGC pointed out, adding the fall was caused primarily by the sharp rise and unusual volatility in the gold price which briefly touched record levels above $1,000 an ounce in mid-March.

In particular, jewellery demand declined 21 per cent year-on-year.

The WGC admitted that India, the largest market for gold and also the most price-sensitive, continued to suffer from the impact of high and volatile prices.

Jewellery and investment demand at 71 tonnes and 31 tonnes, respectively were both half the levels of first quarter of 2007.

Gold sales during the recently concluded Akshay Thrithiya helped bolster the numbers to some extent.

Spot Rubber Finished Steady On Tuesday

Kottayam: Spot rubber finished steady on Tuesday. The market lacked the follow-up support from major consuming sectors though there was no visible selling pressure from growers or dealers. RSS 4 closed unchanged at Rs 122.75. Traders were a bit disappointed when the Japanese markets were marginally down on early trades and a late recovery on the trendsetter failed to strengthen the domestic prices, an observer said. Sheet rubber weakened to Rs 122.25 a kg during the morning session but regained the initial losses in tune with the global gains. The market is expected to follow the international trends in near term amidst dull volumes.

May futures firm

On TOCOM, the May contract was flat at ¥316.3 (Rs 129.49) a kg while the June futures improved to ¥316.8 (¥314.9), July to ¥316.4 (¥314.1), August to ¥317 (¥314.5), September to ¥317 (¥314.6) and October futures to ¥317.6 (¥314.8) a kg for RSS 3.

Spot prices were (Rs/kg): RSS-4: 122.75 (122.75); RSS-5: 120 (120); ungraded: 116.50 (116.50); ISNR 20: 118.50 (118.50) and latex 60 per cent: 82.50 (82.50).

Turmeric Futures In NCDEX Hit The Upper Circuit Of 4 Pc

Mumbai: Turmeric futures in NCDEX on Tuesday hit the upper circuit of 4 per cent at Rs 3,753 a quintal following firm demand in the spot markets and easing arrivals.

Pepper and barley futures also hit the upper circuit at 3.64 per cent and 3 per cent at Rs 15,158 per quintal and Rs 1,270 per quintal respectively. Barley gained on strong demand in the spot markets.

Maize was up marginally by 0.91 per cent at Rs 830 per quintal on good demand in the Nizamabad spot markets.

Cocud recovers

Cocud prices recovered by 1.67 per cent at Rs 445 per 50 kg on firm demand for cotton and other edible oil complex.

Tracking the weak international markets, soyabean futures lost 0.63 per cent to Rs 2,335 per quintal.

Pressure on soya complex prices in eCBOT eased after farmers in Argentina called off their agitation, thus paving the way for negotiations with the government to scrap export duty on farm products.

Sugar fell 0.49 per cent at Rs 1,420 per quintal on lacklustre.

Cardamom futures in MCX hit the upper circuit at 3 per cent on good export demand and low arrivals at the auction centres. Mentha dipped 1.03 per cent to Rs 472 per kg on profit booking after the last week’s rally in prices.

MCX recorded a turnover of Rs 4,866 crore up to 5 pm, while it was Rs 1,825 crore on NCDEX.

Moran Tea Company Ltd No Longer Exists

Kolkata: The Moran Tea Company (India ) Ltd no longer exists. The process of its merger into McLeod Russel became complete last Friday when McLeod Russel filed with the Registrar of Companies the certified copy of the order passed by Calcutta High Court on April 16, 2008, approving the scheme of amalgamation.

According to the scheme of amalgamation, the shareholders of Moran Tea will get four McLeod Russel shares of Rs 5 each for every share of Rs 10 Moran Tea held. The erstwhile Moran Tea had four gardens, all in Assam, with a total production of 4.2 million kg.

Following amalgamation, the total number of gardens under McLeod Russel will rise to 55 and the total production to 75 million kg, according to a spokesman for McLeod Russel.

Trading Resumed At Chilli Market

Guntur: Trading resumed at the chilli market yard here on Monday on a cautious note. About 30,000-32,000 tikkis (bags) were sold with the prices in the range of Rs 3,500 to Rs 4,200 a quintal for the better varieties. Trading was halted in the chilli market yard, the biggest in the country, after the fire on May 3.

Though trading resumed officially on Monday in temporary sheds constructed in the yard for the purpose, there was some trading during the week-end too, with left-over stocks.

According to Nisar Ahmed, Joint Director (Marketing), during the next 10 days or so 10-12 lakh bags of chilli may be brought to the yard and there is likely to be substantial improvement in prices. On Monday, 65,000 bags were brought to the yard, he said.

It is estimated that more than 20 lakh bags of chilli is stored in the cluster of cold storages surrounding the yard. According to a rough estimate, 20 lakh bags of chilli are with the farmers and trading may go on till June 10 or so.

Usually, the trading at the yard starts fizzling out by the last week of May, as farmers’ stocks are exhausted, but this season there has been a fortnight’s halt due to the fire. The season may correspondingly be extended.

L Appi Reddy, Market Committee Chairman, said farmers could bring their stocks without any apprehensions, as fire-fighting equipment were at hand.

Spot Rubber Was Almost Steady

Kottayam: Spot rubber was almost steady except sheet rubber which lost in tandem with the international futures on Monday. RSS 4, the only loser of the day shed 25 paise to close at Rs 122.75 against Rs 123 a kg on buyer resistance.

Covering groups and purchase agents sidelined the market waiting for a positive trend to emerge from the global scene. “There was no selling pressure in the main marketing centres as prices were expected to firm up further once TOCOM recovers after a short term correction,” a trader said. “We are also expecting revised quotes from the tyre sector and it is difficult to predict a target in the absence of domestic futures which has been a major platform for rubber trading during the last five years,” he added.

RSS 3 weakened at its May contract to ¥316.3 (Rs 129.16) from ¥318.4, June to ¥314.9 (318), July to ¥314.1 (317.6), August to 314.5 (318.3), September to 314.6 (317.1) and October to ¥314.8 (318) a kg at TOCOM.

Spot prices were (Rs/kg): RSS-4: 122.75 (123); RSS-5: 120 (120); ungraded: 116.50 (116.50); ISNR 20: 118.50 (118.50) and latex 60 per cent: 82.50 (82.50).

Rubber Price Increased

Kottayam: Physical rubber prices made sharp benefits in the weekend session. RSS 4 increased to Rs 123 from Rs 121 a kg while market made all-round gains amidst low volumes. Spot prices were (Rs/kg): RSS-4: 123 (121); RSS-5: 120 (118.50); ungraded: 116.50 (116); ISNR 20: 118.50 (117.50) and latex 60 per cent: 82.50 (82.50).

Maize Prices Last Week Held Ground At Rs 7,200 A Tonne

Coimbatore: Market yard maize prices last week held ground at Rs 7,200 a tonne, though it is marginally lower compared to the previous week prices.

The delivered maize prices in Gujarat is quoted at Rs 8,400, while the same in Hyderabad is between Rs 7,900 and Rs 8,000 a tonne, according to the weekly commodity price quotes issued by the US Grains Council India market reports.

The maize export from India remained strong. The f.o.b. value of exports via Kandla is quoted at $205 per tonne and the delivered maize price to South-East Asian destination from India is quoted at $260 a tonne.

The report said that with import of India’s maize into Pakistan having opened, maize movement is on from Andhra, Karnataka and to some extend from Bihar.

Bajra, sorghum

The reports said that while bajra prices last week paled by five per cent to Rs 7,330 a tonne on improved arrivals in Rajasthan, UP and Gujarat, sorghum prices stood up by 12 per cent over the previous week at Rs 11,390 a tonne.

Barley

The barley prices remained stable at Rs 10,190 a tonne.

The corn price at the Chicago board of trade is quoted at $232 a tonne for the July shipment and the shipment for September is put at $237.

Mixed Trend At Kochi Tea Sale

Kochi: Mixed trends were evident at the Kochi Tea Auction where exporters operated within a limit on bolder dust tea varieties.

At the leaf tea auction, the presence of exporters and inter-State buyers were evident who helped to sustain higher price levels. There was 11,23,000 kg of dust tea on offer at the auction where clean black teas found firm demand.

Other grades shed a rupee while orthodox dusts remained generally steady. Best CTC dust varieties fetched Rs 60-70, medium CTC quoted Rs 54-58 and below medium was at Rs 50-53. High grown BOPD quoted Rs 90-104 and secondaries ranged at Rs 43-44.

High grown whole leaf and flowery varieties were steady, while brokens and fannings were firm. Medium leaf varieties remained firm to dearer with the active interest of exporters and inter-State buyers. Best Nilgiri varieties quoted Rs 82-95, medium orthodox fetched Rs 75-90 and plain orthodox was at Rs 51-57. Best CTC leaf quoted Rs 60-67 and medium CTC ranged at Rs 50-58.

Top Prices

In the dust segment, Kodanad CLBOPD fetched the top price at Rs 104 followed by Pasuparai SFD at Rs 80, Pasuparai FD at Rs 78 and Sreeram SFD at Rs 74.

In the leaf category Chamraj FOP fetched the top price at Rs 128, followed by Craigmore FOP at Rs 124, Havukal FOP at Rs 116 and Kairbetta TGFOP at Rs 115.

Spot Rubber Increased

Kottayam: Spot rubber increased creating yet another historic high on May 16. A bullish closing in global rubber prices helped the domestic market to regain strength and sheet rubber RSS 4 ended better at Rs 121 against Rs 120 a kg on May 15. The grade (spot) increased to Rs 128.06 (127.18) a kg at Bangkok. Spot prices were (Rs/kg): RSS-4: 121 (120); RSS-5: 118.50 (118); Ungraded: 116 (115); ISNR 20: 117.50 (116.50) and latex 60%: 82.50 (82.50).

Govt Will Import 1.5 Million Tons Pulses

NEW DELHI: The government has decided to import 1.5 million tons of pulses in 2008-09 fiscal through public sector trading agencies, a move aimed at increasing the domestic availability and curb rising prices of the commodity.

"We will import 1.5 million tons of pulses during this fiscal through STC, MMTC, Nafed and PEC," a top government official said.

In last fiscal also, the government had announced that it would import 1.5 million tons of pulses and offered 15 per cent subsidy to these agencies. However, it has not been able to purchase the targeted quantity because of economic factors.

"You cannot just import to meet the target. Imports are to be made in phases so that international prices do not rise sharply. Besides, the domestic prices are also to be monitored," another government official said.

The PSUs have been able to contract nearly 1.4 million tons of pulses, including 0.9 million tons of yellow peas, till May 6 since April last year. Out of these contracted pulses, 1.19 million tons have already arrived in the country and 1.05 million tons are sold in the domestic market.

Giving details about the imports to be made during the current fiscal, the official said out of the 1.5 million tons target fixed for 2008-09, half the imports would be of yellow peas.

India imported 2.5 to 3 million tons of pulses during last fiscal, including purchase made by private traders, and the country is likely to contract similar quantities during 2008-09 fiscal, Pulses Importers Association President K C Bhartiya had said.

According to government's third advance estimate, pulses production is pegged at 15.19 million tons in 2007-08 against the estimated domestic requirement of 16.77 million tons.

Futures Suspension Fails To Trim Commodity Prices

MUMBAI: The federal government's move to suspend futures trading in four commodities has failed to soften prices, and the demand-supply mismatch has in fact pushed up prices of some of these commodities, officials and analysts said.

India suspended futures trading in soyoil, rubber, chickpea or chana, and potato for four months with effect from May 8 to rein in soaring inflation. Following the suspension, prices of soyoil and rubber soared, while that of chana and potato have changed little.

Spot price of soyoil in Indore in central Madhya Pradesh has risen more than 4 percent on soaring world markets and high crude oil prices, traders and importers said.

"Retail prices have gone up after suspension and are now completely tracking global markets like CBOT (Chicago Board of Trade) and Malaysian palm," said S K Handa, managing director of Bharat Food Cooperative Ltd, a Gujarat-based edible oil firm.

India, which imports more than 40 percent of its annual vegetable oil requirement, buys palm oil from Malaysia and Indonesia and soyoil from Brazil and Argentina.

Rubber prices also rose in the Kochi spot market in Kerala, a main trading centre. After a fall on the first day post-suspension, rubber prices shot up more than 3.4 percent to Rs 12,000 on Thursday tracking firm global markets and oil.

"It was not the futures trading that took prices higher. It was the international trend and domestic supply situation," said Siby Monippally, member of Rubber Board. However, the other two commodities -- chana and potato -- were not much affected. Prices of chana have risen only about 0.6 percent in the Delhi spot market since last Wednesday.

"Instead of taking short-term measures the government should concentrate on increasing supply," said K C Bhartiya, president of the Pulses Importers' Association of India.

Potato prices had already plunged 28 percent in a little over two months up to May 8 on hopes of excess output. In the last one week, spot prices have further eased 1.78 percent to Rs 441 per 100 kg in Agra.

Grape Exports Increased

Nashik: Nashik has witnessed 45.52 per cent growth in export of grapes in FY08 (December-April season) compared with last year. As a result the city has earned foreign exchange worth Rs 174.20 crore. In the last six years, grape export from the district has gone up over seven-fold, from 3,775.37 metric tonnes (mt) in FY02 to 27,650 mt in FY08. Nashik comprises 55 per cent of total exports of the commodity from the country and 75 per cent of Maharashtra. Local firms such as Mahindra Shubhlabh Services (MSSL) exported maximum quantity of grapes this year totalling 2599.29 mt, followed by Freshthrop Fruits (1,851.39 mt), Fieldfresh Foods (1,699.2 mt)and Namdhari Farm Fresh (1,066.15 mt).

SC Asks UP Sugar Mills To Pay Rs 110/Qtl For Cane Within Three Weeks

New Delhi: The Supreme Court’s order on Thursday requiring sugar mills in Uttar Pradesh to pay growers of Rs 110 per quintal “within three weeks” for cane purchased during the 2007-08 season (October-September) would entail their making disbursements of over Rs 2,300 crore.

During the recent season, UP mills had procured cane from farmers, against which Rs 8,164.86 crore was payable at the rate of Rs 110 per quintal fixed by the Lucknow Bench of the Allahabad High Court on November 15, 2007.

However, as on May 12, the mills had paid only Rs 5,842.49 crore. That leaves arrears of Rs 2,322.37 crore, which will now have to be discharged within the next three weeks. Of the Rs 2,322.37 crore, private mills owe the bulk of Rs 1,681.95 crore, with cooperatives (Rs 389.35 crore) and State Government-owned mills (Rs 251.07) crore) accounting for the rest.

Separate orders

Some of the sugar companies, including Bajaj Hindusthan, had obtained separate orders from the Allahabad High Court (not the Lucknow Bench) requiring them to pay only the Centre’s statutory minimum price (SMP) of Rs 81.18 per quintal, linked to a base sugar recovery of nine per cent. This was below the flat Rs 110 per quintal rate fixed by the Lucknow Bench and also the State Advised Price (SAP) of Rs 125 per quintal that was earlier decided by the UP Government.

But the Supreme Court has now, in its latest order, directed the mills to pay the Rs 110 per quintal interim rate that was fixed by the Lucknow Bench. The apex court will review this order in July (when it reopens after the summer recess), by which time the Allahabad High Court is also expected to pronounce its final judgment on sugarcane pricing and the fixing of SAP by the State Government. The High Court, on May 9, reserved its judgment.

Dues by cos

The Supreme Court’s interim order, passed by a Bench headed by Justice Arijit Pasayat, would particularly affect Bajaj Hindusthan and the U.K. Modi Group, which have arrears to the tune of 35 per cent and 66 per cent respectively of their total payable amount.

Others with dues in excess of 20 per cent include Mawana Sugars (29 per cent), the K.K. Birla Group and DCM Shriram Industries (24 per cent each), Triveni Engineering and Dhampur Sugar (22 per cent each), Simbhaoli Sugars (21 per cent) and Uttam Sugar (20 per cent).

On the other hand, companies such as DCM Shriram Consolidated (four mills at Ajbapur, Rupapur, Hariyawan and Loni), Sir Shadi Lal Enterprises (two mills at Shamli and Unn) and Parle Biscuits (one unit at Parsendi) have discharged 95 per cent or more of their cane payments. Balrampur Chini’s arrears, too, are relatively low at 14 per cent.

NMCE To Focus On Coffee Futures

Kochi: The National Multi Commodity Exchange of India Ltd (NMCE) is going to focus more on coffee futures trading to increase the volume and participation.

Anil Mishra, CEO, NMCE, told newspersons here that the exchange plans to conduct a series of road shows in Kerala and Karnataka.

They are also planning to launch a new variety of Robusta Cherry EP futures contract at the exchange and is going to apply for permission to launch the new product before the Forward Markets Commission, he said.

In addition to the existing CWC facilities, the exchange also plans to open delivery centres in Wayanad, Kushal Nagar, Hassan, Chikamagalore.

The exchange is planning for a minimum lot of one tonne so that more participation can be ensured, he added.

Coonoor Tea Auctions High

Coonoor: Offers continue to rise for the auctions of Coonoor Tea Trade Association (CTTA) with the brokers’ catalogues for sale no: 20 to take place on Thursday and Friday, showing a volume larger-than-average sale in an auction in the last two years.

In all, 13.11 lakh kg have been catalogued. This is 15,000 kg more than last week.

The volume is as much as 110 per cent more than the 6.23 lakh kg offered this time last year.

Fresh arrivals account for 11.76 lakh kg out of the offer of 13.11 lakh kg. The balance comprises teas unsold in previous auctions. Fresh arrivals are rising because of the favourable rains, which have activated the growth in tea bushes.

According to the UPASI Tea Research Foundation, the cumulative rainfall till April in all agro-climatic zones in Nilgiris had been more than last year as also the decennial average. In April, tea production in its member estates in Nilgiris increased by 52.7 per cent over April 2007.

Orthodox teas

Of the 13.11 lakh kg on offer, as much as 8.95 lakh kg belong to the leaf grades and 4.16 lakh kg belong to the dust grades.

Spot Rubber Upward Trend

Kottayam: Spot rubber bounced back on Wednesday. RSS 4 moved up to Rs 120 from Rs 118.50 a kg ridden by firm international markets.

Certain major manufacturers were also buyers on sheet rubber at the quoted rates, sources confirmed. Technically, a break above this level is expected to trigger yet another sharp bull run.

The market might have reached higher targets during these most bullish days if the domestic futures would not have been suspended, an observer said.

Unimpressive volume

The volumes were not so impressive lacking quantity sellers in the main marketing centres. RSS 3 (spot) rose sharply to Rs 127.04 (124.58) a kg at Bangkok. Its May contract improved to ¥316.2 (Rs 127.56) from ¥314.4 a kg and June to ¥316.1 (Rs 127.55) from ¥314.6 a kg at TOCOM. Spot prices were (Rs/kg): RSS-4: 120 (118.50); RSS-5: 118 (116); ungraded: 115 (114.50); ISNR 20: 116.50 (114.50) and latex 60 per cent: 82.50 (81.50).

Sugar Mills May Be Hit As Cane Area Shrinks

New Delhi: The country’s two leading sugar producing States — Uttar Pradesh and Maharashtra — may see significant reductions in cane availability during the ensuing 2008-09 crushing season (October-September).

Farmers in UP normally plant sugarcane during March-May, which is ready for crushing after 10-11 months from the subsequent late-January to April period. “This year, plantings are down by about 15 per cent. The area is lower by 10 per cent in western UP, 15 per cent in central and 20 per cent in the eastern region,” said C B Patodia, Adviser to the K K Birla Group of Sugar Companies.

But the problem is not just in respect to the plant-cane, but also the ratoon crop that does not require any planting and sprouts from the root stubbles of the harvested plant-cane. The ratoon is a shorter nine-month crop maturing between November and January, depending on when the previous plant-cane was harvested.

“Some growers this time have chosen not to tend even the ratoon crop. Instead, they have sown urad (black matpe) or jowar (sorghum) for fodder use. Both these can be harvested prior to the planting of paddy from June onwards. In a few cases, where the plant cane was harvested towards late-January, farmers have even gone for short-duration wheat,” according to Sanjay Tapriya, Director (Finance), Simbhaoli Sugars Ltd.

Changing preference

Anil Singh, General Secretary of the Kisan Jagriti Manch, said “wherever water-tables are high, especially along the Ganga and Yamuna river-beds, farmers are preferring paddy, for which they have already raised the nurseries”.

Growing cane had turned a ‘bitter experience’ for farmers, considering the Rs 2,400 crore of arrears in payments owed to them by mills in the current 2007-08 season.

“When returns from paddy, wheat, cotton or pulses are far more remunerative, why should any farmer lock up his land under sugarcane for more than twice the duration? The shift to paddy will be more in central and eastern UP than in the western parts, where the flexibility to forsake cane is less,” the farmer leader pointed out.

That would, in turn, hit cane supplies to mills in the coming season and more so during 2009-10, when the reduced planted cane area of this year would spill over to the subsequent ratoon crop.

The cane that is crushed in the early part of the season in UP (November-January) is largely the ratoon crop, with the harvested plant-cane being used from late-February till May (when mills close operations). “About 60-65 per cent of the cane crushed during the season is constituted by the ratoon crop and the remaining 35-40 per cent by the plant-cane,” Tapriya informed.

In Maharashtra, about three-fourths of the cane crushed by mills is the 15-month pre-seasonal crop, sown during July-September. “Our farmers planted about 20 per cent less pre-seasonal cane in July-September 2007, which is to be used in the new season. They have mostly shifted to soyabean, maize or sunflower, with many of them even uprooting the ratoon crop last September-October,” noted Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories’ Federation.

During the current season, Maharashtra mills have, as on May 12, crushed 733.26 lakh tonnes (lt) of cane and produced 87.09 lt of sugar at an average recovery of 11.88 per cent. During the same period of the 2006-07 season, these numbers stood at 749.11 lt, 86.01 lt and 11.48 per cent.

“Though we crushed less cane this time, we have ended up producing more sugar because of unprecedented high recovery rates. On the whole, we expect to end the 2007-08 season with sugar output marginally below the previous season’s 90.91 lt, and the quantity of cane crushed falling from 798 lt to 775 lt,” Naiknavare added.

He projected a sharp drop in cane available for crushing in the 2008-09 season to 610 lt, leading to a sugar output of 68 lt, “with the situation turning further bullish in 2009-10”. Patodia estimated UP’s sugar output in 2008-09 at 65 lt, down from 74 lt of the current season and 84.75 lt in 2006-07.

MCX Is Planning To Open Additional Delivery For Precious Metal

New Delhi: Encouraged by the good response to its Gold Guinea futures contract, leading commodity exchange MCX is planning to open additional delivery centres to facilitate delivery of the precious metal.

"We are planning to have more delivery centers soon," an MCX official said, adding it becomes convenient for players who would like to take the delivery.

Currently, the contract has opened delivery centres at Ahmedabad, Delhi, Mumbai, Hyderabad, Bangalore, Chennai and Kolkata. The delivery centres become important in a mini contract especially when the contract has compulsory delivery norm, an expert said .

'Gold Guinea' futures contract, which can be traded in eight-gram unit, was launched on the MCX on May 8, on the Hindu festival of 'Akshaya Tritiya.' It has received huge response from the participants, the exchange official said.

"This is for the first time a commodity exchange in the country launched a contract that caters to even smallest of retailers. The unit size at 8 gm is quite convenient to trade especially for the retailers who cannot afford to trade in contracts of bigger size," an analyst said.

The Guinea contract has offered the competitive price as compared to physical market where guinea is being sold at 12-14 per cent higher than futures prices.

At 1600 hours today the gold guinea July contract was traded at Rs 9,729 per 8 gram, while that of August delivery at Rs 9,748.

On the first day of the launch, the turnover of both the July and August contracts in terms of volume recorded 181 kg and in terms of value it was Rs 21.5 crore and with open interest on May 9 standing at around 1500 guineas.

However, the average daily volume is 100-120 kg as open interest reached at 13 kg till date, sources said.

Fair Demand At Coimbatore Tea Sales

Coimbatore: The offerings of tea at the weekly auction held here on Friday totaled 6.03 lakh kg with leaf grades accounting for 2.02 lakh kg and the balance 4.01 lakh kg comprising dust.

Limited quantity of orthodox leaf on offer met with fair demand. CIS exporters lent fair support.

Limited quantity of orthodox dust grades sold around last.

HUL selective

There was fair demand for the CTC leaf. The best teas remained irregular around last, the bolder grades and plainer sorts quoted lower by Re 1 and the better liquoring smaller brokens and fannings ruled dearer. There were some withdrawals on bolder brokens. While HUL was selective, exporters lent fair support.

Good liquoring popular CTC dust and better medium grades ruled steady. HUL operated selectively.

The best CTC teas moved in the Rs 57 – Rs 64 price band, while the medium orthodox dust was slightly lower ranging between Rs 50 and Rs 57. Good CTC dust teas quoted between Rs 65 and Rs 68.

Spot Rubber Moves Up

Kottayam: Spot rubber rates moved up catalysed by another bright closing in global indices on Tuesday. RSS 4 improved to Rs 118.50 a kg from Rs 118 as covering groups and purchase agents were fairly active on the grade. There were no revised quotes from the major manufactures.

“The market is poised to explore new highs. There is much difference between domestic and international rubber and traders would possibly feel more safe to be in the buyers queue ” an analyst told Business Line. “Since growers are more conscious about the global price charts, the market might not witness any panic selling during intermediate corrections ” he added.

RSS 3 firmed up to Rs 124.58 (123.31) a kg (spot) at Bangkok.

May futures up

The May contract flared up to ¥314.4 (Rs 127.88) from ¥308 a kg while the grade’s June futures closed higher at ¥314.6 (Rs 127.96) against ¥308.8 a kg at TOCOM.

Spot prices were (Rs/kg): RSS-4: 118.50 (118); RSS-5: 116 (115.50); ungraded: 114.50 (113.50); ISNR 20: 114.50 (114) and latex 60 per cent: 81.50 (81.50).

Spot Rubber Stays Firm

Kottayam: Physical rubber market ruled firm on Monday. Traders were still optimistic on the commodity expecting revised quotes from the major consuming sector as the international prices ruled much above the domestic rates. The inflow was much low and the market suffered from acute short supply.

RSS 4 improved to Rs 118 from Rs 117 a kg and the sentiments were visibly bullish on strong demand. “We expect the market to remain firm in near term riding on strong fundamentals though there would be healthy gap between the national and international prices. There was a time when the average grower had been totally ignorant about the global price movements. Things are quite different now”, said Mr. George Mathew, a planter.

Global price

In the international scene, RSS 3 improved marginally at it’s May contract to ¥308 (Rs 125.06) from ¥306.9 a kg while the June futures slipped to ¥308.8 (Rs 125.51) from ¥309 a kg at TOCOM. The grade (spot) closed at Rs 123.31 a kg at Bangkok.

Spot prices were (Rs/kg): RSS-4: 118 (117); RSS-5: 115.50 (115); ungraded: 113.50 (113); ISNR 20: 114 (113) and latex 60 per cent: 81.50 (81.50).

Seafood Exports From India Fell By 13 Pc

Kochi: Seafood exports from India fell by 13 per cent to Rs 6,266 crore (Rs 7,224 crore) during April-January 2007-08. The prime trigger for this fall was a 13 per cent fall in value of shrimp exports. Shrimp continue to be the top export item in terms of value, fetching 54 per cent of the total export revenue.

The total quantity of export during the period fell by 18 per cent to 4,35,873 tonnes. The fall in quantity was moderately reflected in the dollar earnings which registered a marginal fall of two per cent to $ 1556 million. The major items of export were frozen shrimp which was followed by frozen fish at 17 per cent, frozen cuttle fish at 10 per cent, frozen squid at 5 per cent, dried items at 3 per cent and live and chilled items at one per cent. Other items constituted the remaining nine per cent of exports.

While there was a nominal fall of two per cent in the quantity of shrimp export, the value realized plunged by 13 per cent to Rs 3386 crore. However the dollar realization fell by a modest two per cent to $ 840 million. Frozen fish exports registered a significant fall 26 per cent in quantity and 20 per cent in rupee realization.

The European Union continued to be the biggest export destination for Indian seafood products accounting for 27 per cent of the total volume and 35 per cent in value realisation. However there was a marginal dip in both quantity and value realised from this export destination over the corresponding period of the earlier. Japan was second largest export destination with 12 per cent of the total quantity and accounting for 16 per cent of the rupee value realisation. This was closely followed by USA with 7 per cent of the total quantity and 14 per cent of the value realisation. China and South East Asia have emerged as the other two major export destinations of Indian seafood exports.

Kochi continues to be biggest port for export of seafood accounting for 18 per cent of the total value exported. This was followed by Chennai with 16 per cent, JNP Mumbai with 15 per cent and Vizag with 14 per cent. However, in quantity of seafood export Pipavav was the top port accounting for 27 per cent followed by JNP with 19 per cent, Kochi with 18 per cent and Chennai with eight per cent.

Indian Food Consumption Is One-Fifth Of Average American

Mangalore: The Union Finance Minister, P Chidambaram, has said that the average Indian food consumption is one-fifth of average American food consumption.

Replying to the queries of press-persons on the recent American statement where India was held responsible for food crisis in the world, he said it is a very ‘ill-informed statement.’

“Indians are consuming much less than the average American. If you take food grain and milk, Indian average consumption is one-fifth of average of American consumption. I can turn around and say Americans are eating more. In India, there are people who are poor and malnourished. India has to eat more,” he added.