Monsoon Rainfall Seen Normal by Skymet Boosts India Crop Outlook

The monsoon season in India, which accounts for more than 70 percent of the annual rain, will be normal this year, potentially helping crops from rice to sugar and cotton.

Showers in the June-September period will be 102 percent of a 50-year average of 89 centimeters (35 inches), Skymet Weather Services Pvt., a New Delhi-based private forecaster, said in an e-mailed statement on Thursday. The monsoon may have an “early and fairly strong” start this year, the agency said. Peninsular India, including Kerala state, may start getting showers from around May 27, it said.

A normal rainy season is critical to Prime Minister Narendra Modi’s efforts to boost economic growth in Asia’s third-largest economy and help farmers increase incomes after unseasonal rains and hailstorms damaged crops. Average rainfall will help lower prices of farm products, allowing the Reserve Bank of India to reduce interest rates and bolster demand, said Kishore Narne, associate director and head, commodity and currencies, at Motilal Oswal Commodity Broker Pvt. Ltd.

“The price outlook in general is still bearish and if the monsoon is going to be normal, there will be further pressure on the RBI to come with much faster rate cut in the short term to prop up demand,” Narne said by phone from Mumbai on Thursday. “We are under severe disinflationary pressure on the economy. Despite this unseasonal rains, vegetable prices are coming down, core inflation has gone down.”

Watching Inflation

India’s wholesale prices declined 2.33 percent in March from a year earlier, the Commerce Ministry said Wednesday. Consumer prices rose 5.17 percent in March from a year earlier after a 5.37 percent increase in February, the Statistics Ministry said on Monday.

Reserve Bank Governor Raghuram Rajan kept the benchmark repurchase rate at 7.50 percent last week and said he will wait for commercial lenders to pass on the unscheduled cuts in January and March to customers and watch inflation before easing further.

Agriculture accounts for about 15 percent of India’s gross domestic product and monsoon is the main source of irrigation for the nation’s 263 million farmers, where only 45 percent of the farmland is irrigated.

Unseasonal rains and hailstorms this year damaged crops in 11.3 million hectares (27.9 million acres) and wheat production may fall as much as 5 percent this year from a near-record 95.8 million tons estimated by the government in February, Agriculture Minister Radha Mohan Singh said April 7.

El Nino

Pre-monsoonal rain will be strong across India while unseasonal showers will continue until May, Skymet said.

“The El Nino is likely to continue into the summer months and taper down there after,” Jatin Singh, Skymet’s chief executive officer, said in the statement. “It is not likely to have an adverse impact on monsoon performance.”

An El Nino may develop by June, according to Australia’s state forecaster, which upgraded its outlook for the weather-altering pattern to ‘Alert’ this week. The U.S. Climate Prediction Center has said that a weak El Nino developed in February and last week predicted a 70 percent chance the pattern will continue through the Northern Hemisphere summer.

Skymet said there is a 49 percent probability of normal rains during the June-September monsoon season while the likelihood of below-normal precipitation is 16 percent with a 2 percent chance for a drought.

The onset of the monsoon was delayed last year with rains reaching India’s Kerala state on June 6, compared with the normal date of June 1, according to the India Meteorological Department. Showers were 12 percent below the average recorded between 1951 and 2000, it estimates.

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