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Monsoon Gathers Pace, Cuts Rain Deficit, Aids Rice, Cotton, Soybean Sowing
India’s monsoon, the main source of irrigation for the nation’s 235 million farmers, gained momentum over the weekend, paring the seasonal rainfall deficiency and aiding the planting of rice, cotton and soybean crops.
Heavy falls over most of the country in the past three days cut the deficit to 7 percent as of today from as high as 16 percent in June, and the shortfall may narrow to 4 to 5 percent by the end of the month as rains continue this week, said Ajit Tyagi, director general of the India Meteorological Department.
Increased precipitation may help the world’s second-biggest producer of rice, wheat and sugar lift grain output 6 percent to 230 million metric tons in the year to March 31, Nomura Holdings Inc. said last week. Prime Minister Manmohan Singh is betting on a rebound in agriculture after a drought last year drove up food costs and forced record imports of sugar, edible oils and pulses.
“Food supply is certain to improve with a good monsoon and that is comforting for policymakers,” Dharmakirti Joshi, chief economist with Crisil Ltd., a unit of Standard & Poor’s, said by phone from Mumbai. “As July is the most important month in the monsoon season, a recovery is good for sowing and inflation.”
India’s food inflation rate has stayed above 10 percent for a 14th straight month, increasing pressure on the central bank to raise interest rates. The Reserve Bank of India will probably raise its reverse repurchase rate tomorrow by a quarter-point to 4.25 percent, all 20 forecasts in a Bloomberg News survey showed. It would be the fourth increase in the rate since March.
Soybeans Tumble
Sugar, soybean, corn and soybean oil prices fell in Mumbai on expectation of bigger harvests. Local sugar prices may drop in the 2010-2011 season because of higher output, Vivek Saraogi, managing director of Balrampur Chini Mills Ltd., India’s second- biggest producer, said on a conference call today.
“Most farm commodities are down because of good rain,” said Veeresh Hiremath, an analyst with Karvy Comtrade Ltd. “The good spell has erased any concerns of yield losses.”
August-delivery soybeans fell as much as 3 percent to 2,011 rupees per 100 kilograms on the National Commodity & Derivatives Exchange Ltd. Soybean oil lost as much as 1.4 percent to 476.35 rupees per 10 kilograms and corn for August delivery tumbled as much as 1.9 percent to 1,111 rupees per 100 kilograms.
Sugar prices at Vashi, the biggest wholesale market for the commodity, dropped 0.8 percent to 2,815 rupees per 100 kilograms. The price reached a record 4,050 rupees in January.
Wettest Month
July is the wettest month in the June-to-September season, accounting for third of the total showers. Farmers sowed paddy in 16.97 million hectares (42 million acres) as of July 22, 7.6 percent more from a year ago, and cotton to 9.5 million hectares, up from 8.06 million hectares, the farm ministry said on July 23. Oilseeds were sown on 12.9 million hectares, up 4 percent.
“The performance of the monsoon has been overall good for sowing this year,” weather bureau’s Tyagi said. “Rains may be better in the next two months because of La Nina and that augurs well for agriculture.”
La Nina causes wetter-than-normal conditions in Asia and drier weather in the Americas.
India received 381.6 millimeters (15 inches) of rainfall in the June 1-July 26 period, compared with the 50-year average of 408.5 millimeters. Rains were 5 percent below normal in the northwest region, the main grower of wheat, rice and sugar cane, and 4 percent below average in the central provinces, the top producer of soybeans, the weather office said.
Most parts of the country’s cane, rice, cotton and oilseed areas will get widespread rain in three to four days, Tyagi said.
Rainfall may be 102 percent of the 50-year average for the season, helped by La Nina, the forecaster said last month.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net
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