Monthly Prices Movement

  • Grains complex witnessed a mixed trend throughout the month at the major markets across the country where Wheat and Maize prices declined due to tight supply.

  • Rice prices traded mixed at the major prices with prices gained on expectation of lower production while it declined on rising arrivals. Barley prices remained steady to positive amid festival demand.

Ground Report

  • India Rice exports rose during the period April-August of current fiscal year (FY) 2016-17, according to data released by The Agricultural and Processed Food Products Export Development Authority (APEDA).

  • India's Basmati export surged over 5 percent from April to August at 1,77,5684 tons versus 1,678,797 tons a year ago. Non-Basmati shipment stood at 3,008,238 against 2,983,915 tons previous year.

  • Around 5.275 million tonnes of Paddy has arrived in the grain markets in Haryana so far this season, nearly 18% higher than the Paddy arrival of 4.473 million tonnes during the same period last year, food and supplies officials stated.

  • India's Wheat production forecast for 2016-17 revised lower to 87 million metric tons based on continued tight domestic market supplies as reflected by abnormally strong off-take of government Wheat by the private trade under the open market sale scheme (OMSS) and firm domestic prices despite improved import prospects of cheaper foreign wheat after the government lowered the import duty, USDA informed.

  • The state-run Food Coropration of India (FCI) has procured only 22.9 million tonnes of Wheat as against the target of 30.5 million tonnes set for the 2016-17 marketing year (April-March).

  • The Food Corporation of India (FCI) has procured 41.51 lakh tonnes of Paddy in Punjab and 32.31 lakh tonnes in Haryana so far in the current Kharif Marketing Season (KMS).

  • The government has fixed procurement target for Paddy in terms of rice for Kharif Crop during KMS 2016-17 at 330 lakh tonnes against target of 300 lakh tonnes of last year.

  • Uttar Prdaesh has set target for the Paddy procurement in the marketing year 2016-17 at 5 million metric tonnes which has been approved by the cabinet. The government is targeting maximum procurement this season as it was unable to meet the target last year.

  • Punjab and Haryana are expecting 130 lakh MT and 65 lakh MT of Paddy procurement this season.

  • USDA said India will export 10 million tons of Rice this year and boosted its forecast for shipments next year to 9.5 million tons from 8.8 million tons estimated a month earlier.

  • APEDA stated that India's Basmati Rice export surged over 5% from April to August at 1.78 million tonnes from 1.68 million tonnes a year ago. Non-Basmati shipment marginally increased by 0.84%.

Policies

  • Indian Government has no immediate plans to cut further import duty on Wheat to a zero level as overseas purchase of the grain still works out to be cheaper at the current customs duty level, a senior government official said in a statement. On September 23, import duty on Wheat was reduced to 10% from 25% to boost supplies and check prices during Dusshera and Diwali festivals.

Global

  • The International Grains Council (IGC) has raised its forecast for the 2016/17 world Corn crop to a record high of 1.035 billion tonnes. The boost in production is mainly due to higher production estimates in United States, Argentina and India.

  • World Wheat production in 2016/17 was also upwardly revised by 1 million tonnes to a record 748 million on improved outlooks for Russia and Kazakhstan, according to the IGC report.

  • Global food markets expected to remain balanced as prices for most internationally-traded staple agricultural commodities are low and stable, as there is a record production forecast for this year’s Wheat and Rice harvests as well as rebounding Maize output, which will keep the world food import bill low.

  • Global Rice production predicted to expand for the first time in three years, increasing 1.3% to an all-time high of 497.8 million tonnes, buoyed by abundant monsoon rain over Asia and sizeable increases in Africa.

  • Egypt, the world’s largest importer of Wheat, made the biggest purchase in two years in it's latest tender. The country’s General Authority for Supply Commodities bought 420,000 metric tonnes of Russian and Romanian grain.

  • Egypt is expected to purchase 11.8 million tonnes of Wheat in the current marketing year, down from 11.9 million in the prior season, as per the US Department of Agriculture said in a report earlier this month.

  • Rice exports of Pakistan including Basmati and Non-Basmati Rice fell sharply by 29 percent during September 2016, according to Rice Exports Association of Pakistan (REAP). During the month the country exported 181,350 tons of Rice against 254,458 tons in September 2015, marking a decline of 72,108 tons.

  • Pakistan’s Basmati and Non Basmati Rice exports is continuing it's fall due to tight competition from India.

  • Ukraine's Corn crop harvesting pace in 2016 is reported slower compared to the previous year, which is 34% slower compared to the previous year. Corn starch exports of Ukraine increased by 35% in the 2015/16 season and reached 31580 metric tonnes which was at 23450 metric tonnes in 2014/15 season, as per UkrAgroConsult report.

  • Brazil 2015/2016 Maize production is estimated at 67 mmt, a 21 percent drop from the previous record year. The decrease is due to an early start to the dry season having a big impact on yields for the second safrinha crop, USDA said.

  • Brazilian 2016/2017 Maize production is forecast at 83 mmt due to increased profitability. Because of the tight supplies, high domestic prices are driving an increase in first crop Maize, which is expected to be about 38 percent of the total crop. The area is expected to be taken from soybean as Maize becomes the more profitable crop.

  • In 2016-17, Russia is planning for 40 million tons of Grain exports including 30 million tonnes of Wheat, which is higher than 2015 exports of 32 million tonnes.

Outlook

  • Wheat prices last month declined by 8-10% at the major Indian markets with shipments from Ukraine and Australia landing at Indian ports. Wheat prices are likely to face further correction in November-December when Australia starts harvesting the new crop.

  • As per trade executives, India imported 8 lakh tonnes of Wheat since the beginning of the fiscal year in April and has recently signed contracts for another 2.5 lakh tonnes, predominantly from Ukraine.

  • With global production of Wheat looking great and the Australian and Ukrainian crop close to harvest, we expect prices to go down and India can import more.

  • Owing to a poor rate fixed for the Basmati crop in last two years, farmers this year has decided to curtail the area to a significant level. There will be around 35% less production of the Basmati crop in Punjab.

  • Farmers have demanded that government must fix a MSP for Basmati on the lines of Paddy crops as it will save significant underground water and bring more foreign exchange to the country.

  • Price of 5-percent broken white Rice, an Asian benchmark, may decline as much as 10% in the last two months of the year as harvests start in coming months and demand remains depressed whereas Basmati Rice and fine quality Rice is expected to remain strong in long term due to lower sowing and lower production.

  • By November mid, we can expect Basmati prices to further increase as international buying will begin and production expected to be lower than the previous year.

  • Maize prices have crashed nearly 25% in the spot market as farmers begin to harvest a record crop. Adding to the farmers’ woes are the lower international prices, which have effectively ruled out exports of the commodity.

  • Maize prices likely to trade negative in market as peak arriving season is on progress. Maize stocks are mounting at local mandis and fresh crops having more moisture, it may keep the futures prices under pressure. However, active buying from industrial users such as Poultry feed manufacturers and Starch industry are expected as Maize prices are at lower level.

  • Arrivals of new Maize have is in good pace in several markets in Madhya Pradesh, Rajasthan and other major markets. No major buying activity is happening in Maize as buyers are postponing their Maize procurement waiting for further fall in coming days.

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