Posts Tagged ‘drought’

After 20 Years, India to Import Rice

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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After 20 Years, India to Import Rice

After 20 years, India to import rice:

India, a traditional rice exporter, will import the grain for the first time in 20 years to meet a projected shortfall of the crop hit by drought and floods, government said yesterday.

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The government estimates that there would be a shortfall of over 15 million tonnes in the 2009-10 Kharif (summer) season due to drought and floods in several states.

Thailand’s Foreign Trade department announced that the world’s biggest rice exporter is expected to release part of its huge stock of almost six million tonnes of rice stockpile to India, besides eight other countries, through g-to-g sales programmes.

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In Other major Commodities Updates we can see that the demand-supply gap for natural rubber in the country is set widen.

Demand-supply gap for rubber stretches:

The demand-supply gap for natural rubber in the country is set widen as production is expected to fall and demand set to rise above earlier stimates.

Rubber production for April-October period was 9.4 per cent lower at 4,35,125 tonnes against 4,80,230 tonnes last year.

Consumption grewn three per cent to 5,36,100 tonnes (5,20,375 tonnes).

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The production-consumption mismatch resulted in a sharp rise in imports and a corresponding fall in exports.

Imports increased 133 per cent to 1,26,472 tonnes (54,283 tonnes), while exports plunged 92 per cent to 3,859 tonnes (34,000 tonnes), sources in the Rubber Board said.

The Rubber Board has scaled down the production target for the current fiscal by 2.8 per cent to 8.40 lakh tonnes from the earlier estimates of 8.67 lakh tonnes announced in April.

The forward estimates of production has moved up 6.8 per cent to 9.31 lakh tonnes from the earlier estimate of 8.81 lakh tonnes.

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Rising Sugar Prices Threatens to Make Coming Festival Season Bitter :(

Skyrocket prices of Sugar

Rising sugar prices are threatening to make the coming festival season bitter and are causing concerns for many consumers.

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Moreover, in order to meet increasing demand, India will be forced to import sugar in large quantities and this in all possibility will further increase sugar prices.

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However, local production has plunged to 14.5 million tonnes in the 2008-09 with demand at 23 million tonnes, the deadline for duty-free raw sugar imports has been extended by nine months to December 2010.

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Additionally, the government is going to start a fortnightly sale of non-levy sugar with the September quota set at 2.11 lakh tonnes ๐Ÿ™‚

This year most deficits have been met by opening stocks and next year theyโ€™ll need much larger imports of about 6 million tonnes of raw sugar and 1 million tonnes of white sugar.

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Moreover, nearly 4 million tonnes of sugar have been already purchased by the Indian industry, while India’s sugar shopping spree abroad has sent prices of refined sugar in the global market skyrocketing.

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Additionally, it is said that the world market has recorded a 28-year high and has shot up 60% to $610 per tonne in August 2009 from a level of $380 per tonne in October 2008.

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India Will Import 30% of Its Sugar Following Drought :(

India Will Import 30% of Its Sugar Following Drought

India, the worldโ€™s biggest sugar consumer, may depend on imports to meet almost a third of its demand next year as a drought in the major growing regions threatens cane yield.

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Local sugar consumption may total 23 million metric tons in the year beginning Oct. 1ย  and 30 percent of the supplies will be met through imports.

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Indiaโ€™s production in the season starting Oct. 1 will lag behind the demand of 22 million tons.

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Indian authorities are raiding hoarders to boost the availability of sugar, edible oils and lentils during the August-to-December festival season and cool prices.

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India has set limits on the amount of sugar that traders and institutional users can stockpile as it faces a shortfall in supplies for a second year.

The production of sugar in India during year 2008 and 2009 sugar season has not been adequate to meet the domestic demand of the country.

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Indiaโ€™s dwindling stocks and rising demand have helped raw sugar futures surge to the highest in nearly three decades on prospects of large purchases by the world’s top sugar consumer.

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Weak monsoon rains have further raised supply concerns in India.

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Beside that, there is another Agri Update that Cotton and kharif crop has started arriving in mandis of Punjab and Haryana.

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Although in small quantity, but both the states are hoping to achieve combined cotton output of 45 lakh bales during this year in view of surge in area under crop.

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“As cotton growers have started bringing their crop to grain markets, almost 500 bales per day are arriving in Punjab and 350 bales in Haryana,” traders said.

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The price of fresh cotton is ruling at Rs. 2,550 to Rs. 2,700 per quintal, they said while adding that cotton arrivals are going to pick up in mandis in coming days.

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Cotton crop was the only crop during this Kharif season 2009-10 which has seen increase in its area in both Punjab and Haryana despite the fact that area under other crops such as paddy, sugarcane guar went down considerably due to deficient rains.

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Indiaโ€™s dwindling stocks and rising demand have helped raw sugar futures surge to the highest in nearly three decades on prospects of large purchases by the world’s top sugar consumer.

Weak monsoon rains have further raised supply concerns in India.

Monsoon Deficit Narrows But Just Slightly

monsoon deficit

The rainfall in India seems to have improved a little with the monsoon shortage being at 28% below average for the week ended August 16.

While as on August 12, the overall rainfall in the country was 29% below normal.

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However, rainfall during June 1 to August 16 was at 434.6 mm against the historical average of 602.1 mm while the rainfall in the northwest was 40% below average as on August 16 while in northeast it eased slightly to 32%.

However, the shortfall in central India increased to 21%.

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The Impact Of Significant Below Normal Monsoon:

The current situation definitely does not bode well for the agriculture output.

While in the past, the drought like situation has severely impacted the economic growth (1%-2%), this time the impact could be lower due to:

1. Agri contribution to the overall GDP has been coming down and now stands at ~17% (v/s > 45% in 1970s and > 30% in 1990s)

2. Irrigated land to total land ratio has been improving,

3. National Rural Employment Guarantee Scheme (NREGS) and Farm loan waiver,

4. Significant increase in budgetary allocation to rural development.

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However, if the overall monsoon remains 20-25% below normal and the spatial distribution does not improve, it is likely that FY10 GDP forecasts may be revised downward by 50-100bps.

Increased spending by the Govt and faster implementation of some of the infrastructure projects may limit the damage to ex-agri GDP growth as mentioned above.

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However, Worst affected monsoon deficit areas will have problems of food availability, employment, and drinking water.

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Moreover, India is at a risk of 60-100 basis points drop in GDP growth forecast of 6.4% for FY 2010 while agriculture growth is decreasing by around 5-8% in the current fiscal.

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In addition, rice production during the kharif season this year may decrease by about 10 million tonnes due to declining monsoon in the country while it produced nearly 100 million tonnes of rice in both rabi and kharif seasons in 2008-09.

However, some shortage in production of oilseeds and sugarcane is also expected.

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However, macroeconomic consequences may not be very serious due to the weak monsoon owing to the reasons stated above.

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The Impact Of Significant Below Normal Monsoon:

D-Street may inch towards consolidation: Analysts

Dalal Street

A wave of consolidation is likely to greet Dalal Street this week as concerns over rainfall shortage would pull down investor sentiments and keep the market under pressure, analysts said.

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“The market would remain range-bound and would look for a positive trigger amid the dampening effect on the possibility of a drought-like situation in the country,” Ashika Stock Brokers Research Head Paras Bothra said.

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Analysts also said there might be some positive bias in the movement of the market but absence of any major trigger might shift focus on the rain God.

“Delayed monsoon has made the market totally indecisive of the next move.

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The impact of drought would be felt in some time from now and that is holding back investor confidence to enter market,” SMC Capitals Equity head Jagannadham Thunguntla said.

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Besides, with the US economy showing signs of revival and Germany and France emerging out of the recession quicker than expected, analysts feel it could bring in a positive bias in the market.

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“As it is now a known fact that the major economies are pulling themselves out of the recession, I do not foresee any major collapse in the market in near term as it is all positive news around,” Bothra added.

The BSE Sensex gained 251 points, or 1.66 percent in the past week and closed at 15,411.63 points.