India Queen Basmati Rice
India Queen Basmati Rice

Indian Meteorological Department (IMD) has forecasted India’s monsoon to be deficient this year which has affected the prices of all agro commodities in the country and prices has showed a surge.According to IMD,week monsoon will affect the grain production in India in the coming Kharif season  .

Monsoon is very important for a country whose economy depends on agriculture.India,where more than  70% of population is engaged in agriculture and 60% of cultivated land area is rainfed has a very crucial role of monsoon.In India, monsoon fulfills almost 70% of water requirement.

The firmness in agri commodity prices began mid–April, when IMD first came out with a rainfall forecast of 93 per cent of the long-period average (LPA). In May, prices rose up to 30 per cent in wholesale markets. The rise has been more in the past three weeks. production in India in the coming Kharif season

On May 1, the price of wheat per quintal were Rs 1650 which has raised by 30% now to Rs 2138 per quintal. The prices of other commodities like potatoes, pulses and edible oil has also increased.

Jagdeep Grewal, vice-president (commodities and research), Kunvarji Commodities said that “The price rise is only because of lower production fear. A further rally in the short term looks unlikely. Future movement would depend on the progress of actual rainfall. The government’s response to deficient rain would also have a significant bearing on commodity prices,”

The price hike has make tensed all, including the government, the RBI, farmers and traders. Current forecast of IMD says that this year the rainfall would be 88% of LPA.

Union finance minister Arun Jaitley addressing a press conference said that ““The forecast rainfall pattern is similar to last year. Hence, foodgrain production might not have a significant impact. We have an abundance of foodgrain and our management was efficient last year, with no inflationary pressure”

Food and Agricultural Organization of United Nations has forecasted India’s milled rice production to be lower by 1.4% from previous year production of 95.8 MT. However in a report released on Thursday by FAO says that this year the grain production will remain close to record output of previous year and if sufficient water, fertilizers are supplied then the production may reached at an average yield in 2015 despite of reduction in cultivated area.

Madan Sabnavis, chief economist at CARE Ratings, believes monsoon failure will definitely impact kharif output. “However, the effect on prices was not sharp last year. Pulses’ prices have already moved up and will get impacted. Rice can be stabilised through use of buffer stocks. Edible oil prices can be moderated by imports, given low global prices. But, sustained imports of high magnitude can push up global prices, given the quantum of demand. Therefore, the government might have to hike the minimum support price of kharif crops, which will be inflationary,” he said.

An Assocham study shows pulse’s prices have been spiralling since last year, due to lower production, followed by crop damage on unseasonal rain and hail early this year.

Global commodity prices at 6-year low

Major food commodity prices declined again in May, hitting an almost six-year low as cereal prices fell substantially, amid a favorable outlook for this year’s harvests globally.

The Food Price Index compiled by the Food and Agricultural Organization (FAO) of the United Nations averaged 166.8 points in May, down 1.4 per cent from April and as much as 20.7 per cent from a year earlier. Cereals and dairy products were responsible for much of last month’s decline, although meat quotations also fell. By contrast, the oils and sugar markets firmed up. The May average puts the FAO Food Price Index at its lowest level since September 2009.