The prices of agricultural commodities have surged in the past three weeks, due to either a delay or slow progress of the monsoon.
The Dhanya index on the National Commodity & Derivatives Exchange (NCDEX) is up by 5.6 per cent in these three weeks. Several commodities such as guar gum and seeds, sugar, coriander, maize, etc, have risen even more. The rising streak has sharpened in the past couple of days. The 10 commodities in the index are soybean (10.2 per cent weightage), mustard seed (11 per cent), cotton seed cake (2.6 per cent), wheat (27.6 per cent), channa (12.8 per cent), turmeric (6.9 per cent), pepper (4.7 per cent), jeera (3.9 per cent), guarseed (16.9 per cent) and gur (3.3 per cent).
In these three weeks, coriander futures are up 34 per cent and guar gum and seeds by 20 per cent. Jeera and oilseeds were the other major gainers (see table). According to data compiled by Kotak Economic Research , rainfall data till July 16 indicate weekly precipitation has indeed slowed after June’s strong start. On a cumulative basis till July 16, India was three per cent below the long period average (LPA) rainfall; down from 11 per cent above the LPA till June 30.
Sowing has also slowed, with the acreage of pulses and oilseeds lower than at the same period last year. Only paddy is up, with current acreage up by 600,000 hectares from last year. Total pulses acreage is down by 700,000 ha from last year. Maharashtra, one of the most important producers of pulses, has seen rainfall ranging from deficient to normal across the region. In cash crops, cotton acreage has been low as expected, with Gujarat seeing deficient rain. Overall, crop sowing is lower by around two million ha from last year
Guar seeds’ August contract on the NCDEX has gone up six per cent since Wednesday, to Rs 4,498 per quintal. Guar gum is up seven per cent to Rs 14,186 per qtl. The monsoon has yet to hit Rajasthan, which has affected sowing of guar. Stockists are holding back what they have, as they anticipate a higher price rise in the coming days. Also, the carryover stock of guar seed is 1-1.5 million bags (each 100 kg), compared to 3.5 million bags last year at this time. Meaning, a further rise in the prices of guar futures.
“Guar seed is expected to go up further in the coming week and then a correction will be seen,” said Aurobindo Prasad, head of research, Karvy Comtrade. The maize August contract on NCDEX is up three per cent since Wednesday to Rs 1,244 per quintal, due to scattered rainfall in the crop growing areas of Andhra and Karnataka. Also, the physical carryover of stocks is close to nil. The coriander August contract on NCDEX has climbed eight per cent to Rs 6,082 per qtl, as the stock is damaged due to rain in the crop growing areas, which has caused prices of the commodity to move up. The retail demand for sugar has sweetened the commodity and has caused it to go up by two per cent to Rs 2,845 per qtl.
