Adverse monsoon keeps sentiment up for Indian agri commodities prices
−− Even as overall sowing was reported high, it is the crop productivity that is likely to be affected due to abnormalities in rains.
Aug. 12, 2020
For the last 3 months, we have been mentioning that monsoon is the major factor that would determine the price movement for the agri counters. We have regularly been giving a bullish report. This was despite the fact that as per IMD, the 'overall' rainfall in the Indian sub-continent was normal. But the point to be noted here was the abnormality in monsoon rains in the major kharif crop growing areas of North-West India, where a huge deficiency of 22 percent was recorded – as per IMD, in its latest report.
This is considered harmful for the crop. Again the deficient rains in North-West India were compensated by excessively heavy rains seen in East and South India, where again, the amounts were a massive 9 percent and 18 percent above normal, respectively – leading to floods in many regions. This again is considered harmful for the crops.
Even as overall sowing was reported high, it is the crop productivity that is likely to be affected due to these abnormalities in rains.
Apart from the monsoon factor, the festive season demand for the month and for the coming months, too, supported prices. Rise in export demand also is a supporting factor – aided by an overall firmness in Dollar versus Rupee. As the arrivals slow down, it is the demand factor that would start playing an important role in price determination for the agri counters.
As monsoon plays truant and demand starts rising in mandis amidst limited arrivals, we expect further uptrend in prices for the agri commodities. Continuing with our bullish reports for last 3 months, we are further extending the targets for September contracts for the following agri commodities till end of the month:
Chana: Rs 4,500 per quintal
Guarseed: Rs 4,500 per quintal
Guargum: Rs 7,500 per quintal
Jeera: Rs 15,000 per quintal
Turmeric: Rs 6,400 per quintal
Dhaniya: Rs 7,000 per quintal
Refined Soya Oil: Rs 920 per 10 kg
Soybean: Rs 4,120 per quintal
RMSeed: Rs 5,400 per quintal
CPO: Rs 780 per 10 kg
In case, monsoon activity improves – mainly over North-West India, over next few days, it may lead to temporary short-term corrections in agri prices. But the overall market sentiment seems to indicate an overall recovery of prices in the coming weeks.
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