Lower advance crop estimate should check futures fall

Agricultural commodity futures prices, falling over a month, are likely to end this streak following the issue of the first advance estimates of the kharif crop by the Union agriculture ministry.

Cotton, sugar and chana should see a rise in the coming days, as the first advance estimate figure for the crop is lower as compared to last year. Cotton (33.4 million bales) is estimated at 5.1 per cent lower and sugarcane (335.3 million tonnes) at 6.2 per cent lower. “Cotton, chana and sugar futures are expected to rise,” said Vedika Narvekar, senior research analyst at Angel Broking.

In the past two trading sessions, agricultural commodities witnessed heavy selling on the back of a revival in rainfall in crop growing areas, coupled with the nearing of the kharif harvest.

The edible oil counter was also trading weak, as palm oil and soybean prices have been falling globally and india is import-dependent; prices correlate with global movements. However, today’s estimate showed a lower oilseed crop, by 9.6 per cent to 18.8 mt.

Rainfall was scattered at the beginning of the monsoon but picked up momentum by August, raising hopes of a better-than-expected crop, which caused agri commodities to fall on the futures platform. Harvesting of the kharif crop is expected to start by the beginning of October and this is currently pulling down all futures of agri commodities on the National Commodity & Derivatives Exchange (NCDEX). The crop is sown in June, with the start of the monsoon season. Spices are also trading down, on the back of lower demand. Coriander saw a 3.8 per cent fall in the last two trading sessions, closing at Rs 3,941 a quintal on NCDEX.