Agri-commodities prices go down as rainfall improves

With the rainfall picking up in the last few weeks, prices for agri-commodities like sugar, turmeric, potato, pepper and cotton have gone down.

Spot price for sugar has fallen 5% to Rs 3,636 per quintal from a high of Rs 3,831 per quintal on August 4. Similarly, prices for turmeric have declined 3%, 4% for potato, 4% for pepper and 1% for cotton.

The cumulative rainfall deficit for June-August has gone down to 12.5%. At least 22 of 36 meteorological sub-divisions are now reporting normal or excess rainfall, up from 11 a month back.

The North West region continues to recieve significant rains, bringing its total deficit down to 14.7%.

Water availability has improved and 84 reservoirs are already at normal levels, but still significantly below last year’s levels.

A Barclays report has pegged a near zero growth rate for agriculture and allied activities in FY12-13. According to the report, if the monsoon deteriorates, the growth could even turn negative. As an extreme case, it pegs a 5% y-o-y decline in agriculture GDP could drag GDP for FY 12-13 to 5%.

The report says that the recent downpour may not have a significant positive impact on the Kharif (summer) crop, as sowing has remained significantly below average, particularly for pulses and oilseeds. But it will perhaps alleviate concerns on the Rabi (winter) crop, which would have compounded both growth and inflation headaches for policymakers.

A non-negative growth in agriculture will depend on a relatively better winter crop like in 2009-10.

The data from department of agriculture indicates that sowing patterns have improved.

Total acreage under major crops has risen to 938mn, lower by just 1.9% over last years as against 8% deficiency in July 2012, according to an Emkay report.

The gross cropped area for rice was 329 mn hectares, which is 3.2% higher than August last year while for coarse cereals it was 165 mn hectares, almost 15% lower than August 2011. Pulses saw a decline of 11% while oilseeds a marginally rise of 0.3%, as per the report.