As we are doorsteps of June, all eyes are on the progress of the annual southwest monsoon. Agro commodities have already started responding to news and developments regarding the monsoon.
Contradictory views from The Indian Meteorological Department (IMD) and the private weather agency, Skymet, are constantly being aired. While the IMD is expected to stick to its 'normal' monsoon forecast and will soon be releasing its region-wise expected rainfall distribution, Skymet has already put out its below-normal-rain forecast, citing El Nino conditions.
In a recent development, the UN World Meteorological Organisation said that there is a 60-65 percent chance of El Nino weather conditions emerging between June and August, but a strong El Nino looks unlikely and conditions may ease in September-November.
Most models, however, suggest a delay in the onset of the monsoon in India this year and below-normal rains in June. Accordingly, prices of agro commodities may rise in the near term, particularly those of kharif crops, including cotton, soybean, guar seed, turmeric and maize.
Except soybean, the output of all other commodities was affected by drought last year. Once the southwest monsoon sets in and starts advancing, sowing activity may start, thus capping a further rise in the prices of these commodities. Even if the monsoon sets in with a bang, other factors such as its uninterrupted advance and region-wise rainfall distribution are crucial for sowing. Meanwhile, the Minimum Support Price (MSP) announced by the government will determine sowing preferences.
Preliminary expectations reveal an increase in the area under soybean cultivation in 2019-20, particularly in Maharashtra. The cotton crop yield has been lower in this state for the last two years due to the 2018-19 drought and the 2017-18 bollworm attack. Farmers may thus shift to the largest grown kharif oilseed in coming season.
At the same time, however, market participants expect a reasonable hike in the MSP of cotton for a second consecutive year. This should attract farmers, particularly in Rajasthan, to opt for cotton at the cost of guar, which failed to offer reasonable returns despite a curtailed output in 2018-19.
In the situation where the monsoon's advance is interrupted and much delayed, particularly in Gujarat and Rajasthan, farmers generally prefer castor seed and guar, which can be sown in August as well.
Turmeric is a long-duration crop: sowing in June and harvesting in January-February. Farmers growing turmeric normally opt for this spice only; thus, the area under turmeric cultivation is more or less steady except for exceptional years of huge water shortages.
Many factors would have an impact on the sowing of kharif crops. Thus, we expect prices of agro-commodities, particularly those of kharif commodities to be volatile in coming months.
No comments:
Post a Comment