)
Agriculture commodities have become dearer by up to 11.5 per cent in the last two weeks on confirmation by the India Meteorological Department (IMD) of a 12 per cent monsoon rainfall deficit this year.
The July-August period, which normally receives 65 per cent of the season’s rainfall, has received 16-24 per cent lower rain than the long period average.
“Updated analysis of the most critical atmospheric and oceanic variables for the monsoon predicts a final seasonal monsoon rainfall value 12 per cent below normal. The updated outlook all but guarantees the monsoon will end up more than 10 per cent below normal. At these levels, production of both rabi and kharif crops can suffer,” said Adam Turchioe, weather research analyst at Thomson Reuters GFMS.
“Agriculture commodity prices have firmed up in the last few weeks due to the monsoon’s unsatisfactory progress. Rainfall was 22 per cent deficient in August, after the 16 per cent deficit in July. Agriculture commodity prices are likely to continue to remain firm,” said Naveen Mathur, associate director for commodities and currencies at Angel Broking.
Castor seed for September delivery is at Rs 4,140 a quintal and at Rs 4,324 three months later on the National Commodity & Derivatives Exchange (NCDEX). Turmeric for September delivery is at Rs 8,144 a quintal and at Rs 9,932 for April 2016 delivery.
“Traders have started taking advantage of the arbitrage opportunity in inter-commodity contracts, which has raised the trading volume in far-month contracts significantly,” said Mathur.
Despite deficient monsoon rain, the kharif acreage was 2 per cent higher at 99.9 million hectares on September 4, 2015, compared with 97.9 million hectares a year ago.
“Prices of agriculture commodities have started moving up and the probability of a further increase remains high with production already depressed by a poor monsoon last year,” said Gaurang Kakkad, an analyst with Religare Institutional Research.
Barring cotton and jute, acreage under all summer sown crops was higher. But the higher acreage is projected to yield lower output on weak germination and plant development.
