Posts Tagged ‘Monsoon’

Global Coffee Output May Dip 3.6 Per cent in the 2009-10

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

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Global Coffee Output May Dip 3.6 Per cent in the 2009-10

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Global coffee output may dip 3.6% : ICO

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Global coffee output may dip 3.6 per cent to 7.41 million tonnes (mt) in the 2009-10 crop year on fall in production in Brazil and Africa, the International Coffee Organisation (ICO) said.

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Adverse climatic conditions in few growing regions may also affect crop quality, it added.

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Last year, world coffee output had stood at 7.69 mt, it said, adding that the estimate for this year is preliminary as data from Colombia and Vietnam is pending.

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“With factors such as a prolonged dry season and high levels of coffee berry borer infestation, there appears to be little possibility of an increase in global production,” ICO said in its latest market report.

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In Other major Commodities Update, there are news of rabi productions falling short of expectations and Uttarakhand government seems not to be increasing the sugar price.

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Rabi output may fail to meet estimates:

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All eyes are now on the estimates for the rabi crop this year.

A good winter crop (rabi) will help augment the foodgrain supply and ease food prices.

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Hopes of a good crop have been fuelled by favourable weather conditions and the greater thrust on increasing the rabi crop.

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The Union agriculture ministry has already indicated that the rabi season, this year, may see an additional 10 million tonne (mt) of output over the past year’s production, implying a growth of 8%.

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This optimism on the rabi crop has prompted the Central Statistical Organisation or CSO — the government’s statistics arm — to estimate a meagre fall of 0.2% in agri output this year despite a 16% fall in the kharif (or summer crop) output due to the deficient monsoon.

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Uttarakhand not to increase sugarcane price:

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The Uttarakhand government seems to be in no mood to increase the price of Rs 215-220 per quintal for sugarcane despite a hefty increase by private sugar mills.

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In the first week of December, the government announced the state advised price (SAP) of Rs 192-197 at a time when farmers were agitating for a price of Rs 250.

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But soon, the private mills began paying heavy bonuses to farmers in the face of acute shortfall in a desperate bid to keep the factories running.

The government too decided to give bonus with a final price of Rs 215-220.

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INFLATION…. “THE SILENT CREEPER”

Hello Friends here we come up with another write up on “SMC Gyan Series”.

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INFLATION…. “THE SILENT CREEPER”

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Topic is INFLATION…. “THE SILENT CREEPER”

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Here, we would go through the Brief of like what are the impacts of inflation on economy in current scenario and what are the reasons for the inflation?

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It is an alarming situation when the entire world is fighting with this historical economic crisis.

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Inflation is adding additional pressure on government as well as consumers.

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Major contributor of this whopping hike in inflation is food inflation at present context.

Mismatch between demand and supply worldwide created chaos and sent prices of many commodities at multi year highs.

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According to the latest data, food inflation rose to 17.47 % for the week ended

November 21, 2009 against 15.58 % in the previous week owing to spiraling prices of
vegetables, pulses and sugar.

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If we talk about overall WPI inflation, it doubled to 1.34 % in October as compared to 0.50 % in the previous month.

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On year on year basis, food prices jumped by 13.32% in October only.

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Rice, pulses, sugar and potatoes, onions were up by 13.22%, 22.81%, 45.70%, 96.43% and 37.60% respectively.

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Reasons for inflation and its impact on economy:

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•  Bleak monsoon coupled with worst drought in nearly four decades in the country situation is haunting the entire economy.

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According to an estimate, India may see a drop of 18% in Kharif crop.

It will create further demand and supply mismatch.

People will spend less, if prices will move in the same way and ultimately it will affect most of the sector of economy.

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•  To encourage farmers to produce more, government has recently increased the MSP (Minimum support Price) of rice, oilseeds, cotton, sugar and many more.

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Higher MSP immediately pushed the prices up.

Though the long term impact of this step will be positive, as more farmers will produce more to get good remuneration.

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•  Hoarding by stockist, farmers in anticipation of further hike in prices is also creating a demand supply mismatch, resulting in higher food inflation.

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•  Government has to compete high with the large scale entry of private players, which procure grains aggressively for biscuits, millers and manufacturers of processed foods.

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•  Declining trend of public investment in agriculture is another concern for government at present.

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Next Blog we would try to know about the possible Measures to check inflation.

Stay Tuned for more and more on this 🙂

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Food Inflation at 17.5%, Households Pay Price

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

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Food inflation at 17.5%, households pay price

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Food inflation at 17.5%, households pay price:

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The government on Thursday said that the average wholesale price of food items had increased by a whopping 17.5% in the past one year.

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The figure was 15.6% a week ago.

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RBI to shift to a tighter money policy,which in turn would lead to a rise in interest rates.

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The Centre has blamed this year’s poor monsoon for high food prices.

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It also put the onus on state governments to control prices through better management of food supply through ration shops.

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In Other major Commodities Updates, we bring you the news of Govt opting for transgenic tech to boost pulses production and Natural rubber prices going double in a year.

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Govt looks to transgenic tech to boost pulses production:

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The Union government is drawing up a comprehensive programme to introduce transgenic technology to improve the productivity of pulses.

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Bt refers to a gene sourced from a soil bacterium that is transferred to plants and acts as an insecticide.

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The Bt gene activates a toxin that kills a class of pests largely responsible for damaging plants and, thus, denting yields.

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They are genetically low yielding and less responsive to inputs compared with other cereals and oil seeds.

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Not only are they more prone to pests and diseases, hybrids and genetically modified varieties are not available to enhance productivity.

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The agriculture department has said it plans to increase pulse production by 2 mt and acreage by 4 million ha by 2012.

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Natural rubber prices double in a year:

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The natural rubber (NR) prices have almost doubled in a year.

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The benchmark grade RSS-4 variety was quoted at Rs 128 a kg on Thursday compared with Rs 65 a kg on same day last year.

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The rubber market is now poised to break all records despite good production this season.

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The local market follows its global peers resulting in a sharp increase in the prices in the futures trading.

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According to Rubber Board estimates, production in November increased to 103,000 tonnes compared with 95,550 tonnes in the same month last year.

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Production is expected to be at its peak in this month due to the winter season and supply is expected to improve further.

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The board estimates also revealed that the total stock in the country increased to 247,000 tonnes.

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This is due to the sharp increase in imports and a drop in exports during April-November.

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Wheat Sowing Picks Up Pace Across India

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

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Wheat sowing picks up pace across India

Wheat sowing picks up pace across India:


As per the latest government estimate, wheat has been sown in around 13.70 million hectares of land till last week, almost 5% more than the same period last year.

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Sowing in India ‘s two main wheat growing province of Punjab and Haryana,which contribute almost 80% of the total country’s production is nearing end.

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Officials believe that  barring delayed harvest kharif crops, cooler temperature in most parts of northern, central and western India added with the recent unseasonal rains should provide an ideal climatic condition for good wheat sowing and early growth.

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The government expects an additional two million tonne of wheat production during the rabi season to offset some of the losses incurred during the kharif harvest.

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However, as per studies done by Indian Council of Agriculture Research, wheat yield can come down by almost 50 kilograms per hectare per day if it is sown very late (beyond December) in northern states.

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The output drop in southern wheat growing states and in Maharashtra and Karnataka is estimated to be around 36 kilograms per hectare per day if the crop is sown very late.

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In Other major Commodities Updates we can read about India’s FM statement on Inflation root cause and launching of in 12 commodities by MCX.


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Inflation due to food items shortage: FM


The current trend in inflation in India is a result of a shortage of food items and not due to a demand-push factor, Union finance minister Pranab Mukherjee told Parliament on Tuesday.

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The food articles index rose an annual 15.6% as at 14 November, up from the previous week’s 14.6% rise.

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The weakest monsoon since 1972 and then floods in parts of the country have hurt farm output and pushed up food prices.

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The finance minister said the government is keeping a close watch on futures trading in commodities.

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The Centre is planning massive investment to boost farm output, the minister said.

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MCX launches EFP in 12 commodities:


The Multi-Commodity Exchange of India (MCX) has introduced the exchange of futures for physicals (EFP) transactions in 12 commodities from Tuesday, the bourse said in a release.

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This process will help traders who have already entered into an agreement for physical trade to take position on futures platform for transparent pricing mechanism.

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In EPF, if the quality of the commodity traded does not match MCX specifications, both parties can then decide on a premium or discount to the settlement price on the futures platform on the delivery date.

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“Seasonal Index – “Time is Money” Part 2

Hello Friends here we come up with an extension of our previous blog, Seasonal Index……“Time is Money” Part 1

In previous Blog, we had touched upon the aspect like what is seasonal pattern and reasons for studying seasonal variation.

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Seasonal Index……“Time is Money”


Now we would see the analysis part of seasonal patterns in predicting the future prices of the commodity.

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The Analysis

Crop prices tend to follow a general seasonal pattern of their own, identifying the major turning points in prices, setting their seasonal low at harvest followed by a post-harvest rally, where the supply of the crop is fixed and consumption gradually takes that supply, causing prices to rise.

However, major market shocks or powerful influencing factors like monsoon, production figures, stock levels & demand may significantly alter seasonal patterns & the prices may experience the special condition.

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This is what happened with the Guar prices.

The ‘Guar’ legume plant is rain-fed monsoon crop.

Monsoon has been the decisive factor for the trend in guar futures.

The sowing period is July and August right after the first shower of the monsoon and the harvesting period is September and November.

Fresh arrivals of the crop from Haryana and Punjab begin immediately after the first week of September and continue till the month of December.

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One example would be redeploying capital in Guar futures in two phases by taking selling positions from April as monsoon sets in – boosting the production levels, and buying in the month of June when the rally begins.

If we follow the price index & compare it with the actual, then it is seen that the prices have followed the path of the seasonal trend many times in this year & have given their best highs from month of June to August.

The seasonality shown in the below graphs depicts that the positive wave has given a satisfying return on investment in both of these commodities, & the strategy adopted of “Sell in April” makes this clear.


Guar Seed Seasonal Index vs Actual

Guar Seed Seasonal Index vs Actual



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Again, the investors taking fresh buying positions from the end of June & holding till the end of the year have had always hard-earned profits.

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Stay Tuned for more on this.

In next blog we would read about that how an annual average method can be used to generate a seasonal pattern in predicting the future prices of the commodity and seasonal pattern in the year 2009.

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CORN………. “The Un-discovered Legend” Part 1

Hello Friends here we come up with another write up on “Commodity Corner Series”.

Here we would touch upon the importance of Maize crop in Indian commodity market and its relevance in the context of Indian Scenario 🙂

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CORN………. “The Un-discovered Legend”

Maize, also known as corn, is a cereal which is an important crop after rice and wheat.

The domestication of maize has been dated back as far back as 12,000 years ago. Today, maize is widely cultivated throughout the world, in a greater size with top producing countries like United States, China, Brazil, France, Indonesia, India and South Africa.

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Indian Scenario:

Andhra Pradesh is now the largest producer contributing around 21% of annual maize production.

India ‘s area harvested of maize and yield have risen by mainly on account of rising production of single cross hybrids seeds, its demand and increasing acceptability among farmers.

In India, its cultivation extends from the hot arid plains of Rajasthan and Gujarat to the wet hills of Assam and Bengal.

There are three distinct seasons for the cultivation of maize:

the main season is kharif;

next is Rabi in Peninsular India and Bihar and

in spring in northern India.

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Normally, higher yields have been recorded in the rabi and spring crops.

Over 85 per cent of the maize acreage is sown under rain-fed conditions during the monsoon when over 80 per cent of the annual rainfall is received.

However, this year due to the erratic monsoon production has been affected, as a result of which maize prices have been in uptrend since the withdrawal of monsoon from the country.

During 2008-9, Indian exported 3 million tonnes of maize and 12,000 tonnes of maize seed worth of Rs 2,400 crore and Rs 2,000 crore respectively.

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Stay Tuned for more on this.

In next blog we would touch upon the issues like Potential source of demand for Maize crop, Industrial Demand and PVO (Price-volume-open Interest) of MAize crops.

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RBI’s Monetary Policy Stance – Part 3

Just an extension of our previous blog “RBI, Monetary Projections And Indian Economy


RBI’s Monetary Policy Stance - Part 3

RBI’s Monetary Policy Stance - Part 3

In this Blog we would touch upon the aspects as that of RBI’s Monetary Policy Stance and few more facts which carries direct or indirect connection with the RBI Policies.

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For example, business confidence index ,industrial recovery status, overall consumption and investment, export-imports status etc;

The True Facts:

So far business confidence has also improved, and demand conditions seem to have picked up, as seen by better order book and increased capital finance requirements.

Industrial recovery seems to be on its way with 5.8% growth in IIP during April-August ’09.

A revival in capital flows, and stronger performance of the core infrastructure sector (4.8% for April-August ’09) seems to be indicating a slight recovery in the economy.

However, there has been a deceleration in growth of private consumption and investment demand, and raw material prices are expected to rise on account of inflationary pressures.

The deficient monsoon could also reduce rural demand.

First quarter earnings of corporates reflect a decline in sales, and non-food credit growth has decelerated, with credit card and consumer durables related credit turning negative.

Exports have continued to decline as external demand dependent services remain sluggish.

The economy is showing some signs of recovery, while a rising CPI has now pushed WPI into the positive territory, mainly on account of higher food prices.

The RBI’s stance will thus have to manage the trade-off inflationary pressures between supporting growth and controlling .

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Monetary Policy Stance

On the basis of the above overall assessment, the stance of monetary policy for the remaining period of 2009-10 will be as follows:

– Keep a vigil on the trends in inflation and be prepared to respond swiftly and effectively through policy adjustments to stabilize inflation expectations.

Monitor the liquidity situation closely and manage it actively to ensure that credit demands of productive sectors are adequately met while also securing price stability and financial stability.

-Maintain a monetary and interest rate regime consistent with price stability and financial stability, and supportive of the growth process.

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Stay Tuned for more on the topic.

We would cover Analysis view from the Analyst with respect to the monetary point of view.

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Lower Output of Rice will Shift More Demand for Wheat

Hello Friends, just an extension of our previous blog “wheat may move in range with up bias”.

Lower Output of Rice will Shift More Demand for Wheat

Lower output of rice and maize will shift more demand for wheat

Despite record wheat production in 2007-08, wheat consumption in 2008/09 is estimated to have declined to around 70.2 million tonnes from 76.2 million tonnes in the previous year due to high prices.

Domestic prices have shot up after a significant hike in the minimum support price discouraging consumption.

Highly subsidized rice distribution program of some state government also tempered wheat demand.

Domestic wheat consumption in 2009-10 is expected to rise by 70.2 million tonnes to 76.88 million tonnes ; likely decline in rice and maize production may lift wheat demand.

Export ban may continue, import at this juncture is viable

With bumper production and significant built up of stock wheat export was earlier estimated to be 2 million tonnes in 2009-10.

Even government relaxing ban placed in February, 2007 allowed two million tonnes of government-to government export.

But weak monsoon and poor sowing prospects of paddy forced
government to scrap government-to-government export allowed earlier.

It is likely that government would continue with its stance on export of wheat at least till the end of current marketing year.

After importing wheat in 2006-07 (6.2 million tonnes) and 2007-08 (1.8 million tonnes), India did not import any wheat in 2008/09 as the domestic supply situation improved considerably.

As domestic supply situation is comfortable, import is also not likely in the current season.

However imports are currently viable as international prices of wheat (equivalent to domestic mill quality) are lower.

Ukraine origin wheat is trading $ 180-200 per tonne and

Australian wheat is at $ 210-230 per tonne, while wheat prices on Southern India is at around $275-300 per tonne.

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In Next Blog, We would touch upon the aspects like Domestic and International price trend of wheat. demand and supply scenario in coming months, price trend and on Export Ban.

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WHEAT MAY MOVE IN RANGE WITH UP BIAS

Domestic wheat prices have escalated by around 10 per cent

Domestic wheat prices have escalated by around 10 per cent

Domestic wheat prices have escalated by around 10 per cent amid concerns of adverse monsoon and flood in Karnataka and Andhra Pradesh, which has raised concern over kharif food grain production particularly rice and maize.

Although there is still some upside left as far as wheat prices are concerned.

The prices will face strong resistance at higher level as supply situation in India and in rest of the world is in healthy shape.

Ample availability of stock at domestic level

At domestic level, wheat inventories have increased after two back to back record crops in the country.

Due to better carry over stock and record purchase government stocks reached to second highest level in the history at 32.29 million tonnes almost double than buffer stock requirement of 17 million tonne.

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According to the Agriculture ministry’s fourth advance estimates, India produced a record crop of 80.58 million tonnes in 2008-09, while production was at 78.57 million tonnes in 2007- 08.

With bumper production and steep hike in minimum support price, government made record purchase of 25.3 million tonnes this year, 13 percent more as compared to last year.

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Prospects of next year crop

Despite having comfortable supply currently, weak monsoon, flood in Andhra Pradesh and Karnataka and consequent Shortfall in kharif paddy output prospects has started fueling prices in the market.

A smaller paddy and maize crop will lift demand for their substitutes, primarily wheat.

As per crop weather watch report, acreage of kharif paddy this year remained at 324.28 million hectare till October 09, 2009 which is 16.2 percent or 6.26 million hectare lower than same period last year.

However kharif maize acreage remained higher this year but recent flood in Andhra Pradesh and Karnataka has aggravated the concerns of lower output.

As per Agriculture department report, kharif maize acreage was at 71.08 lakh hectares, 0.8 percent or 0.5 lakh hectares higher than last year.

Besides, flood in Karnataka and Andhra Pradesh and weak monsoon also raised concern over prospect of next wheat Crop.

Due to weak monsoon in northern part of India mainly in Punjab, Haryana and Uttar Pradesh, soil moisture condition is not sufficiently good for next wheat sowing.

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Water storage in this region has also declined. As per Central Water Commission’s latest data in 81 important water reservoirs monitored by CWC in different parts of the country, total live storage has increased from 90.48 BCM on 01.102009 to 91.75 BCM on 08.10.2009.

But still is far from a satisfactory level.

Stay Tuned for More on this topic.

We would see demand and supply scenario in coming months, price trend and on Export Ban.

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No Global food crisis even after India’s rice export ban :)

No Global food crisis even after India’s rice export ban :)

No Global food crisis even after India’s rice export ban 🙂

No global food crisis is on the cards on account of India’s rice export ban and possible high imports.

A reduction in exports from India and possible imports to the tune of two million tonnes plus is unlikely to spark another global food crisis.

The UN Food and Agriculture Organization (FAO) has said that drought in India may slash rice output in the world’s second-largest grower by about 18% this year, cutting global supplies available for importers.

India’s absence in the export market may curb supplies at a time when global stockpiles are forecast by the FAO to drop 3 % to 117.4 million MT by the end of the 2009-2010 season.

In Other major Agri Updates we can see that Deccan floods have made spices too hot to handle.

Turmeric prices have more than doubled from Rs 3,500 per quintal levels in January, causing NCDEX to impose special margin on long positions.


High prices have also led to an increase in acreage of the crop and production is expected to be over 55 lakh bags in 2010, against 35-40 lakh bags this year.

Among other spices, jeera is likely to move up in the medium term on back of good export demand and a bad crop in Syria and Turkey.

Indian Jeera is also quoting a low price in international markets.

Even pepper is expected to remain firm due to low stocks in main producing countries like India, Vietnam and Indonesia and slow arrivals from Brazil.

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No global food crisis is on the cards on account of India’s rice export ban and possible high imports.

A reduction in exports from India and possible imports to the tune of two million tonnes plus is unlikely to spark another global food crisis.

The UN Food and Agriculture Organization (FAO) has said that drought in India may slash rice output in the world’s second-largest grower by about 18% this year,cutting global supplies available for importers.

India’s absence in the export market may curb supplies at a time when global stockpiles are forecast by the FAO to drop 3 % to 117.4 million MT by the end of the 2009-2010 season.

In Other major Agri Updates we can see that Deccan floods have made spices too hot to handle.

Turmeric prices have more than doubled from Rs 3,500 per quintal levels in January, causing NCDEX to impose special margin on long positions.

High prices have also led to an increase in acreage of the crop and production is expected to be over 55 lakh bags in 2010, against 35-40 lakh bags this year.

Among other spices, jeera is likely to move up in the medium term on back of good export demand and a bad crop in Syria and Turkey.

Indian Jeera is also quoting a low price in international markets.

Even pepper is expected to remain firm due to low stocks in main producing countries like India, Vietnam and Indonesia and slow arrivals from Brazil.

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