Agricultural futures fall on hopes of good kharif production

The Ministry of Agriculture has estimated India's total foodgrain production this kharif season would fall 10% to 117.19 mn tonnes

The prices of agricultural commodities declined in futures trade, amid hopes a revival in the monsoon season would raise the prospects of a good kharif output.

Today, castor seed and chana contracts for near-month delivery hit the lower circuit to close at Rs 3,375 a quintal and Rs 4,377 a quintal, respectively, while Kapas for delivery in February plunged three per cent to end the week at Rs 860 per 20 kg. Commodities like Shankar kapas saw a steep fall.

Ajay Kedia, managing director of broking firm Kedia Stocks and Commodities, attributed the fall in prices to the repercussion of global trends for India. Globally, the sentiment for agricultural output had suddenly turned positive, he said. Last month, prices were rising on anticipated demand in the festive season. While the festive demand sentiment in the retail market would continue, the sentiment in the futures market had receded, he added.

In a recent report, the India Meteorological Department (IMD) stated about 75 per cent of the rainfall deficit had been bridged, owing to good rains since the first week of August. The monsoon season is expected to withdraw in a week. Though monsoon rains were delayed in major kharif crop growing areas this year, sowing intensified later. This led to hopes of a higher output this year, compared to last year.

Indranil Sen Gupta, India economist at DSP Merrill Lynch (India), said the recent revival in the monsoon had pulled the seasonal rainfall deficit down to nine per cent of normal from 22 per cent in mid-July. However, it is too late for a full recovery in the kharif crops' output.

Meanwhile, the Ministry of Agriculture has estimated India’s total foodgrain production this kharif season would fall 10 per cent to 117.19 million tonnes (mt). The ministry had earlier forecast a higher decline in the kharif foodgrain output. In the kharif season last year, foodgrain production stood at 129.94 mt.

Swing of kharif crops, which began in June, is almost over, and harvesting these crops would begin in early October.

According to the first advance estimate for rice output this year, production would fall to 85.56 mt from a record 91.53 mt last year. The output of pulses is projected to fall from 6.16 mt to about 5 mt, while coarse cereals' output is estimated to fall from 32.26 mt to about 26 mt. Cotton production is seen at about 32 million bales (of 170 kg each), compared with 35.2 million bales last year, while sugarcane output is estimated to remain flat.

In central India, farmers are keen to increase the acreage for tur and urad, owing to the revival in rains. The Ministry of Agriculture has, therefore, reported an increase in the acreage of kharif crops.