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Maize is Up

posted Jul 18, 2010, 3:33 AM by Unknown user
As expected in our previous post, Bihar maize have witnessed a sudden spike. The major reason seems to be monsoons which seam to be effecting arrivals in the major market of Dalkhola. On a larger scale, the reason seems to be weak sowing progress of Kharif crop along with weak carry over stocks in international market. According to latest reports of Ministry of Agriculture, the total sowing acreage of maize as on 2nd July is reduced by 23 per cent to 12.70 lakh hectares due to delayed monsoon in Northern parts of India and according to USDA, global coarse grain ending stocks for 2010 11 are projected sharply lower at 141 million tonnes, down 4.2% from the previous month. Also there is some good demand coming up from the local poultry and the starch industries. Hence going forward maize continues to look bullish with reduced arrivals and strong local and export demand. 

Soybean is up in the international markets mainly due to adverse weather for soybean in US, which is largest producer in the world. But the effect should be short lived. In India as such there is not any major reason in domestic market which can alone make market positive. Monsoon is progressing well, sowing is satisfactory and we expect area to increase this year. Country is having enough old crop stock which is yet to be crushed. Thus basically there seems no reason to become very much optimistic about the prices. But since we can’t ignore the international market sentiments, it is expected that time to time some upside may be seen. Overall the trend is still bearish. 

Rapeseed also witnessed some increase in price in early July due to positive sentiments in Soybean, as we had prescribed in our last post. But as with soybean this little positive trend was hard to sustain in India. Monsoon is fully active and kharif crop sowing is going on well in most parts of the country. Thus over the past two weeks prices have plummeted again.  However, many of the physical traders opine that there in not much scope of downside movement in rapeseed going forward. Thus any sharp fall if seen, would result in immediate fresh buying. Also in the physical markets arrivals have reduced significantly during last 15 days. But the most important factor i.e. export demand is very lackluster as always. Hence rapeseed seems to give mixed signal.

Turmeric in the begining of July corrected a bit due to lower demand and reports of increase in area sown. However lower availability of turmeric till the fresh arrivals in the month of February next year will support the prices to remain firm in the short term (till July). Further, demand from the overseas buyers ahead of Ramzan is supporting the prices to remain firm. In fact new buyers from EU & Japan should also adding pressure to the prices. Coupled with this is the fact that the carryovers stocks are very less (around 7000 Tons only) and farmers are hoarding these stocks till fresh arrivals become available in February next year. According to Spices Board of India, during FY 09-10, India exported 50,750 tonnes worth of Rs.38,123 lakh of Turmeric against 52,500 tonnes worth of Rs.24,857 lakhs in the same period last year. Also latest reports from Spice Board of India indicates the exports for the period April-May have risen by 8% to 10,350 MT in 2010 from 9,625 MT in 2009. Hence all these above factors point in only one direction for Turmeric. But expectations of rise in area under the spice might keep the upside under check in coming sessions. We now change our view from steady to bullishness. 

Chilli growing areas in Guntur district of Andhra Pradesh received good rains in the last few days. Chilli farmers have commenced land and soil treatment activities, and tilling. There is expectation of good crop this year too. Also the demand for chilli has been steady from Bangladesh, Malaysia, etc. Keeping this in mind we expect the prices to be neutral for the coming couple of weeks.