Agri futures fall on early monsoon

Rising rupee also a contributing factor.

The prices of major agri commodity futures have fallen on expectation of a better monsoon. Traders and commodity analysts said the monsoon hitting the southern coast of the country far ahead of its schedule will suit the crop.

For instance, the futures prices of commodities including barley, turmeric, pepper, chilli, guarseed, jeera, maize and soybean have fallen during the last week. Wheat futures, which were launched last week, has also been continuously dipping.
 

WASHED AWAY
Item	Closing price (Rs/quintal)		% Change(-)
	May 18	May 25
Barley	974	936	3.90
Turmeric	5,622	4,990	11.24
Pepper	12,858	12,499	2.70
Chilli*	4,815	4,620	4.05
Guarseed	1,792	1,708	4.69
Jeera	11,775	11,120	5.56
Wheat**	1,153	1,124	2.52
Soybean	2,695	2,568	4.70
* June contract                                      ** Rs 1153/quintal on May 21

Naveen Mathur, associate director (commodities and currencies), Angel Commodities, said, “One of the factors which is driving the market low is the monsoon hitting the southern coast two weeks in advance. I believe that normal monsoon will ensure a better supply of crops.”

Monsoon sensitive guarseed has shown the weakening signals with futures market declining by as much as 4.5 per cent. Similarly, barley, turmeric and jeera have dipped by 4-10 per cent in the last one week period. Commodity experts maintained that last couple of years had seen average to bad monsoon which affected the crop output.

However, market analysts added that monsoon was not the only factor taking the agri commodities futures down. “All commodities have their respective fundamentals and technicals. These underlying factors, along with the monsoon, are bringing corrections in the market. The monsoon effect, alone, will not take the market so high or so low,” said Sudha Acharya, research analyst at Agriwatch Commodities.

Near month futures of wheat have reacted to Agriculture Minister Sharad Pawar’s statement in which he said that wheat will not be exported to ensure domestic availability at a cheaper rate. In response to the government’s stand on wheat, the June futures of the grain commodity closed on Monday at Rs 1,124 a quintal against the closing price of Rs 1,153 a quintal on the day wheat futures were launched last week.

In chilli, for instance, the stock position in states like Andhra Pradesh and Karnataka is sufficient. Physical markets for chilli in Andhra are closed till the first week of June. Similarly, for turmeric, jeera and pepper, it is not a peak season for demand.

According to Mathur, apart from monsoon, appreciation of the rupee is another contributing factor for declining prices. “Since, several agri commodities are imported, the rupee appreciation has helped decrease landing costs and making domestic prices more competitive,” he said.

In case of pulses, traders are anticipating a drop in domestic prices. According to them, landing cost of pulses are expected to drop by Rs 200-300 a quintal.