July 31, 2012
India''s poultry feed prices up on unfavourable monsoon rains
Due to depressing monsoon rains in major agricultural regions and spill-over strength from higher global prices, India''s poultry feed prices have increased sharply.
According to analysts and traders, on Monday (July 30) that further increases are expected.
Feed prices, which are up 69% since this time last year, may push food inflation higher over the next few months, Nomura said in a report.
The food component of India''s wholesale price index rose 10.81% in June, despite government efforts to limit price rises, such as by keeping import tariffs on some agricultural commodities low.
Rising animal feed prices are early indicators of the potential impact that reduced monsoon rainfall, 21% below the long-term average as of Sunday (July 29), can have on food prices, Nomura said.
In 2009, when parts of India were hit by drought, feed prices didn''t increase as sharply as they have so far this year. In the last five months, poultry feed prices have risen 18.5-26% on a delivered basis to north Indian farms, to around INR27,000 (US$487) per tonne, said Amit Sachdev, the Indian representative at the US Grains Council (USGC).
Delivered prices of soymeal at poultry farms in Maharashtra state are around INR46,000 (US$830) per tonne, up from INR18,000 (US$325) per tonne in October. Corn prices have risen INR2,000 (US$36) per tonne in the last two months, to INR13,500 (US$243) per tonne on a delivered basis at processing mills in Maharashtra.
Soymeal prices started rising even before the monsoon season, which generally runs from June-September. This was because a lot of soymeal was exported at attractive rates, reducing availability, a New Delhi-based commodities exporter said.
According to data from the Indian Meteorological Department, 22 of India''s 36 weather zones received deficient rainfall as of July 25. Plantings of corn and oilseeds are running behind schedule due to late and insufficient rainfall, which may drag down output and support prices.
The USGC''s Sachdev noted, however, that excessive rainfall has hurt soy plantings in parts of Maharashtra and Madhya Pradesh state. According to government data, India has in each of the past two years produced more than 16 million tonnes of corn from summer plantings, which are harvested in the fourth quarter and account for more than 80% of the country''s annual output. Annual soy production exceeded 12 million tonnes in the same period. Production of corn and soy may decline this year, but forecasts can''t be easily projected, as the monsoon situation is still evolving and plantings aren''t complete, analysts said.
Poultry manufacturers have said demand is currently subdued due to the fasting season of both Hindus and Muslims but it will likely pick up by the end of August.