Cereals up on monsoon angst

There has been a sudden spurt in prices of all coarse cereals including maize, barley, pearl millet, and sorghum by up to Rs 650 a tonne following confusion over performance of monsoon and lack of supplies in some parts of the country.

The rise in Indian prices has come at a time when global corn prices have softened marginally due to good sowing in the US.

In the last seven days there has been considerable scepticism over monsoon and this seems to be one of the reasons for rise in prices, said market analyst Amit Sachdev.

While the India Meteorological Department has retained its forecast of a normal monsoon, another government research body, Centre for Mathematical Modelling and Computer Simulation has predicted deficient rainfall in June and July.

This is the first rally in prices of coarse cereals over a long time.

Traders feel shortfall in supplies, particularly of maize and sorghum, in south and west India is also pushing up the prices.

Pearl millet or bajra spot prices of different varieties are averaging between a low of Rs 5,225 to a high of Rs 6,750 per tonne. The average price is Rs 6,100 a tonne.

At the state level, bajra fetched the highest price in Gujarat at Rs 6,180 per tonne, while in Karnataka the commodity sold for the country's lowest price of 5,225 per tonne.

Bajra quoted at Rs 5,176-6,264 a tonne in the previous week. Maize or corn prices also rose over the previous week and crossed the 8,700 per tonne mark in Gujarat, where stocks of the yellow variety were traded at Rs 8,750 a tonne.

Corn prices in other states are ranging from a high of Rs 6,400 in Rajasthan to a low of Rs 4,745 a tonne in Bihar, where stocks are well supplied. Maize was trading at Rs 4,915-5,742 a tonne in the previous week.

Small gains have also been made in futures trading of corn. June futures are holding steady at Rs 5,000-5,400 a tonne, while for July and August, the prices are at Rs 5,450-5,500 a tonne and Rs 5,400-5,600 per tonne, respectively.

US corn futures have marginally eased during the week to Tuesday and are currently quoting around $86.00 per tonne. Free-on-board values for US corn exports to west Asia are close to $100 and $103 per tonne for July and August deliveries, respectively, which is considered an attractive price.

In the US, 95 per cent of the corn has been planted and about 83 per cent have even emerged from the ground and this is keeping prices under check, said Sachdev.

Barley prices also showed an upward trend and traded at an average price of 5,660 per tonne, higher than last week average of Rs 5,485.

Barley price was highest in Punjab where the commodity was traded at Rs 6,485. The lowest price was in Haryana, at around Rs 5,745.

Sorghum prices also went up and the hybrid sorghum, which was trading at an average of Rs 4,875 per tonne till few weeks back is now being sold at Rs 5,355. Prices in Gujarat went up Rs 850 to per tonne to Rs 7,700. Free-on-board values for US sorghum exports to west Asia are quoting at $107 per tonne.

Traders feel proper advancement of monsoon may lead to a market correction in the coming days but supply position will continue to play a crucial role in price movement.