September 27, 2011

 

India's monsoon rainfall increases prospects for better harvest

 

 

Monsoon rainfall in India was above average for a second year, improving prospects for better harvest and increased exports, according to a Bloomberg report.

 

Rainfall totalled 89.27 centimetres (35.1 inches) between June 1 and September 25, compared with the 50-year average of 86.4 centimetres, data from the India Meteorological Department showed. The average rains in the June-September period between 1951 and 2000 were 89 centimetres, according to the forecaster.

 

Increased supply of rice, corn, sugar and oilseeds may accelerate a decline in India's food price inflation, the highest among the biggest emerging markets, and cap global food costs monitored by the UN that climbed 26% in the past year.

 

"There is some cushion as far as supplies are concerned because of the rains," Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said. "We will be in surplus in some commodities but exports will depend on global prices."

 

Commodities fell to their lowest in almost 10 months on speculation Europe's debt crisis will worsen, curbing demand for food and raw-materials. The Standard & Poor's GSCI Spot Index ended last week down 21% from the almost three-year high in April, the common definition of a bear market. The last time the index fell that much was in 2008 when the global economy sank into its worst slump since World War II.

 

 "The state of the global economy that we are seeing now is worse than what we had three to six months ago," Dominic Schnider, global head of commodity research for UBS AG's wealt management unit, said. He predicted benchmark commodity indexes will drop a further 10% to 15% from now.

 

Rains are 103% above average so far this year, exceeding a forecast for 95% precipitation in the four month rainy season, according to data from the forecaster. That has spurred farmers to boost planting of cotton, soy and rice, according to the farm ministry.

 

Production of monsoon-sown food grains may climb 3% to 123.9 million tonnes from a year earlier, the ministry said. Oilseed output will gain to a record 20.9 million tonnes, said.

 

The government allowed wheat exports by private companies for the first time in four years on September 8 after four straight years of record harvests. It also scrapped a ban on rice shipments after state reserves climbed.

 

The food-grain production may reach 245 million tonnes in the year that began on July 1, compared with 241.6 million tonnes a year earlier, according to the farm ministry.

 

India may have a surplus of as much as four million tonnes of sugar for exports in the year beginning October 1 as output climbs to the highest level in five years, the National Federation of Cooperative Sugar Factories Ltd. Said.

 

Production may climb to 26.5 million tonnes next year, compared with an estimated 24.3 million tonnes in this year, Managing Director Vinay Kumar said.