Monsoon rainfall in India, set to be the best in three years, will help the nation’s 235 million farmers harvest record crops of rice, corn, cotton and oilseeds, lowering food inflation from near a two-month high.
The country got 911 millimeters (35.9 inches) of rainfall between June 1 and Sept. 29 after the La Nina event increased precipitation in August and September, exceeding the 50-year average of 889.2 millimeters, according to data from the India Meteorological Department. That’s the heaviest since 2007 and matches the agency’s forecast in June.
Increased farm output may cool inflation that has prompted India’s central bank to increase rates five times this year and ensure food security at a time when adverse weather has damaged grains and oilseeds crops from Russia to Canada. A drought last year forced Asia’s second-fastest-growing major economy to make record imports of edible oils, sugar and pulses.
“There are global uncertainties with regard to food crops after Russia and Ukraine banned grain exports because of dry weather,” said Sonal Varma, an economist with Nomura Holdings Inc. in Mumbai. “A good harvest here will ensure that India is not affected by it.”
Rice has gained 29 percent in Chicago since the end of June, partly because floods in Pakistan curbed production, and reached the highest in almost five months on Sept. 28. Soybeans reached a 15-month high this week on concern dryness may delay sowing in Brazil and Argentina, the top suppliers after the U.S., and a cold snap harms the crop in China, the biggest user.
Wheat prices have surged 42 percent since the end of June after Russia’s worst drought in five decades, and corn is set for the best quarterly advance in almost four years. Sugar has jumped 79 percent since reaching a 13-month low on May 7.
In India, an index measuring wholesale prices of products including lentils, rice and vegetables climbed 16.44 percent in the week ended Sept. 18 from a year ago, a trade ministry report showed in New Delhi today. The price situation in the country remains a concern and the central bank will respond to contain it, central bank’s Deputy Governor Subir Gokarn said yesterday.
“Food inflation should come down to low single-digit once the harvest begins in full swing from November,” Varma said. “Higher local production of sugar and wheat will ensure India doesn’t import inflation.”
Production of grains sown at the start of the country’s June to September rainy season may rise to 114.63 million tons, from 103.84 million tons a year earlier, according to the farm ministry. Output of oilseeds such as peanuts and sunflower may rise to 17.3 million tons from 15.7 million tons a year earlier, the ministry said. The corn crop may be in excess of 20 million tons, according to Adani Enterprises Ltd., India’s top non-state trader of farm goods.
Sugar output may be 25.5 million tons in the 2010-11 season starting tomorrow, the highest in three years, according to the Indian Sugar Mills Association.
India’s northwest region, including the main wheat-growing states of Punjab and Haryana, and Uttar Pradesh, the top cane-grower, got 13 percent more rain than normal, the bureau said. Showers in the central states, the nation’s biggest producer of soybeans, were 4 percent above normal.
“The late withdrawal in monsoon will ensure that we have a good winter crop, including wheat,” said Varma said. The wheat harvest may be a record 82 million tons this year, according to Farm Secretary P.K. Basu.
Rain over the southern peninsula was 18 percent more than normal until yesterday and the eastern states, which account for more than 70 percent of the nation’s tea output, had a deficit of 18 percent, data from the forecaster show.
India’s monsoon season runs from June 1 to Sept. 30.