Amid the global meltdown, India’s export-oriented commodities continued to perform better with prices of cotton (Shankar 6 variety), sugar and sesameseed jumping 18.42 per cent, 27.19 per cent and 87.14 per cent respectively during Samvat 2064, thanks to the rupee’s dramatic depreciation.
However, globally, commodities, including base metals, precious metals, edible oils and crude oil, continued to move in tandem with international prices. Developments like political instability in Iraq, Iran continuing with its nuclear programme and, above all, the global financial crisis hampered the sentiment in commodity markets.
Exporters enjoy higher realisation if the value of the rupee decreases against the dollar as all overseas dealings are carried out in the American currency.
After hitting the record high of Rs 7,958 per quintal early this financial year on 20 per cent estimated decline in cotton sowing area and production in the US, India’s benchmark Shankar 6 variety ended Samvat 2064 at Rs 6,327 per quintal.
Similarly, following a decrease in the acreage under sugarcane, the only raw material for sugar manufacturing, the M30 variety of the sweetener closed the Samvat at Rs 1,847.50, after breaching the high of Rs 2,014.50 per quintal in April.
Growing cane demand for the ongoing biodiesel programme in Brazil helped sugar become stronger, but the global crisis pulled the commodity’s prices down, an analyst said.
Witnessing high prices of crude oil at $145.66, most European countries and Brazil diverted cane for ethanol production. India also jumped onto the bandwagon by making 5 per cent blending mandatory. Now, with crude oil at $63, most of ethanol manufacturing programmes have been shelved.
Sugar is a viable option now as the global demand is increasing, said the analyst.
Crop diversion from sugarcane (20 per cent less sowing this year) and cotton (5 per cent lower acreage this season) to the most remunerative agricultural commodities of Samvat 2064, edible oilseeds, in India happened in tandem with global prices. Apparently, massive plantations followed by bumper crops in Malaysia, Indonesia and Argentina, the three giant palm and soyoil exporting countries, helped reduce prices globally. However, the magnitude of price decline was lower in India because of a weakening Indian rupee, which depreciated over 27 per cent during Samvat 2064. The rupee ended today at 49.87 against the greenback from the level of 39.33 around the same time last year.
Last Samvat was fearful for base metals and precious metals. However, the quantum of fall was higher in base metals as a majority of industrial commodities were ruling at their all-time highs. Therefore, the drastic decline did not come as a surprise.
An import-dependent India witnessed 14 per cent slump in the yellow metal prices by about 14 per cent during this Samvat.
