The months of May-August remains critical for India as the Kharif crop production depends a lot on the rains in this time. Excess or deficient rains can be harmful for the sowing prospects and a delay in sowing can shoot up rates for the Agri Commodities.
The latest IMD estimated figures of overall rainfall for the country at 96% of the long period average (vs 99% as predicted in April) is thus a concerning factor. As per its latest Press Release, there was a 3-4 days delay in arrival of South-West Monsoon over Andaman Sea. It set in over Kerala on 5th June vs the normal time of 1st June. But it covered the entire country on 11th July - 4 days prior to the normal date. But that is hardly a comforting factor. For the country as a whole, seasonal rainfall during this year’s monsoon has so far upto 11 July been 22% below the LPA.
``The prospects of a normal Monsoon this year seems bleak if we consider the situations till date,`` said Ajitesh Mullick , AVP - retail research, Religare Broking.
The North-West, Central and the Southern states of India have till date received less than normal rains (36%, 22% and 27% below normal). This has affected the sowing of Kharif crops like Urad, Tur and Moong in the Central regions, leading to a flare up in rates for these Pulses and in effect Chana rates which has shot up by 15-20% over last 2 months. Delayed rains have also affected adversely Cotton sowing in Maharashtra, MP, Karnataka and Gujarat - its rates too shot up by 20-25% in last 2 months. Lower rains in the Southern state of Kerala have reportedly delayed the arrivals of Cardamom by 1-2 months from the normal time of July.
Further he said, ``One could witness its rates too rising by ~20% over last 2 month period. There will not be any immediate impact of Monsoon delay for other Spices like Jeera, Turmeric, Pepper and Chilli as their arrivals are nearing completion but lower rains would affect the sowing activities in the later months. This factor has caused prices to flare up in Spices also.``
``July month report would be very critical especially for the North-West region. Rates for Commodities like Guar, Soybean and Cotton which are grown in States like Rajasthan, Punjab and Gujarat would depend on the Monsoon progress to these states. A deficient rain in these states could delay the sowing activities in these states, lower their productivity and create a further Bullish impact on the Agri sector as a whole. As of now, most reports indicate a decrease in rainfall activities over North-West. The possibility of El Nino effect as predicted in August could aggravate the Monsoon scenario even further,`` he added.
``India imports a good amount of Soybean oil and Pulses from the International markets. Lower production prospects of Soybean in the US due to adverse weather conditions there have already created a Bullish impact on the Indian prices. Lower Indian Pulses production have led to higher imports from Myanmar and Australia. This has resulted in the firm trend that we see for Pulses in the Indian markets now. A strong Dollar vs Re aggravated the problem further by raising the import cost of these products. Thus delayed rains, higher imports and higher import costs along with firmness in rates in the International markets - all these have resulted in Indian rates shooting up over last 2 months,`` he opined.
``For the coming month, we expect the Bullish run in Agri Commodities to continue based on 3 factors-Less possibility of a recovery in Monsoon activities (leading to lower kharif production); Dollar remaining strong vs Re (leading to higher import cost); Increased imports (due to lower production prospects) leading to further rise in price in the International markets and having a corresponding similar impact on the Indian rates,`` he opined.
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