The Hindu Business Line : Markets sense fall in kharif output in advance

Chennai, Sept. 25 Agricultural produce markets in the country seem to have sniffed well in advance a fall in the production of some of the key crops, going by the trend in prices of some of the commodities. This is despite the Centre coming out with the first advance estimate of this year’s kharif production only on Wednesday.

In fact, the market had woken up to the emerging scenario even as monsoon played truant in July and then wreaked havoc in major agrarian States during August and September. Going by the retain price trend of agricultural products and given the fact that the Centre has been concerned over soaring inflation, it is unlikely that there will be any relief from the rising trend in the rate of inflation.

Main force

Prices of almost all commodities are higher compared with the same period last year and the main force behind the rise in prices has been supply shortage besides fears of production being hit by an erratic monsoon.

Though monsoon hit the country’s shores well ahead of the scheduled date of June 1, little went right thereafter. After a surplus June, the monsoon has witnessed deficit and thanks to rains in September, the deficit has been cut to one per cent of the normal rainfall.

One good example of the market sensing things in store can be the trend in rice price. Prices of fine raw rice in Hyderabad were quoted at Rs 2,150 a quintal in August against Rs 2,000 during September last year. But with rains flooding paddy fields in the North-East, Bihar, Uttar Pradesh, Assam, the rates began witnessing a rise. On Thursday, it was quoted at Rs 2,300 a quintal.

Though the Agriculture Ministry has put kharif rice production at 83.25 million tonnes (mt) compared with 82.81 mt last year, the market seems to think otherwise, particularly in the wake of nearly 20 lakh hectares being affected by flood. Analysts and market players view the higher production estimates as an effort on the part of the Centre to “talk down the market”.

Maize price trend can be termed as exception as the prices which ruled at Rs 975 a quintal on export demand in September last declined to Rs 675 in August as the Centre banned its exports. However, with data showing a fall in area and natural also coming into play, the prices have currently increased to Rs 1,000 a quintal. Same is the story with other coarse grains such as bajra and jowar.

Kharif sowing

Even as kharif sowing was mid-way through, the pulses trend was very much in tune with reports of lower coverage of the lentils. Almost all pulses have gained by over Rs 250 a quintal since August and by over Rs 500 compared with rates last year.

Cotton is another case where at the start of the season, there was a talk of production being higher than last year. But first lack of rains and then floods, followed by pest attacks have all scaled down the output estimates for the oncoming season starting October.

Export demand

On the other hand, export demand is also weighing in on the market, with US reporting lower acreage and China reported to be eager to import more cotton.

As a result, cotton prices are on the upswing. For example, Shankar-6, which is one of the varieties mainly exported, has gained at Rs 27,200 a candy of 355.56 kg from Rs 24,700 in August. Like other crops, jute prices too began gathering momentum from the time reports came in of the growing areas being flooded. As a result, prices have gone up nearly 25 per cent compared with last year.

Related Stories:
20 lh kharif crop area lost to floods, says Centre
Kharif crops in over 18 lakh hectares affected

More Stories on : Commodity Markets | Commodities | Cultivation

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