Deficient rainfall to affect kharif crop and cause price

MUMBAI: Deficient rainfall in most part of the country could lead to the increased risks of lower kharif output and rise in prices of agriculture products, particularly in oilseeds and pulses, according to leading brokerage house Edelweiss Securities.

Monsoon, so far, has been much below par even as it has picked up marginally in July. Sowing in all key kharif crops is below normal, which could result in weak output, going forward, said Edelweiss in its report on the progress in monsoon and its impact on the economy.

From inflation perspective, oilseeds are emerging as a key risk area because of lower domestic sowing and rising international prices. There are also concerns over production of pulses due to poor sowing season so far.

Among other food grains, rice sowing is relatively lower, but record stock in government granaries will mitigate risk. Among cash crops, cotton sowing has been almost normal so far, after seeing a record production in FY12.

Edelweiss is concerned that progress of the monsoon has been disappointing so far. Most regions of India have reported deficient rainfall, which has adversely impacted Kharif sowing.

However, the situation is not as bad as during drought in 2009 and there are still hopes of improvement in rainfall in next few days. Despite this, the broader concerns remain that rainfall will be below normal this year and so will be kharif output, according to Edelweiss Securities.