Agri commodities rise on fears of low rainfall

Most of the agri commodities on Ncdex were up more than 1% during the day session

Prices of agricultural commodities rose sharply on Friday, following the meteorological department’s prediction of below-normal rainfall this kharif season. The department had estimated rainfall at 95 per cent of the long-period average. A range of 96 per cent to 104 per cent shows normal rainfall.

On the National Commodities & Derivatives Exchange (NCDEX), most agricultural commodities rose about one per cent during the day session. Castor seed, guar gum, guar seed and soybean were trading three per cent higher. Barley, chana, cotton, oilseed cake, jeera, mustard seed and turmeric also saw a rise.

Other factors also impacted the increase in prices. For instance, in the case of soybean, low arrivals had an impact. Fear of lower rainfall had gripped the market earlier, too, when private weather forecaster Skymet had predicted, the El Niño weather phenomenon would lead to low rainfall in India. Analysts expect the northern and western regions of the country to be severely impacted due to a weak monsoon; these regions account for a substantial portion of the country’s agricultural activity.

“The movement in today’s commodity market was a logical knee jerk reaction to Meteorological Department’s weather forecast. Going ahead, there might be a drought in certain parts of the country. All kharif commodities such as soybean, cotton, turmeric and guar seed are expected to be impacted in a big way in the coming monsoon season,” said Naveen Mathur, associate director (commodities and currencies), Angel Broking.

Experts believe this kahrif season would be similar to the one in 2009, when many agricultural commodities such as oilseeds, sugar and cotton had hit new highs due to the El Niño. “Since India is a southeast country, the El Niño impact might lead to a draught-like situation in many crop-growing areas, the way it was in 2009. We will see commodities pricing shooting up in the coming months,” said Vinita Advani, research analyst, Geojit Comtrade.