Agri Picks Report August 11, 2023: Geojit
Private weather forecaster Skymet has raised concerns about the monsoon rainfall in India, indicating that it is expected to turn negative in the upcoming days due to the influence of the El Niño phenomenon, particularly during August and September. El Niño is a climate pattern characterized by warming sea surface temperatures in the Pacific Ocean, which can have significant impacts on global weather patterns, including monsoon systems.
Skymet has noted that the axis of the monsoon trough, a key component of the monsoon system, has shifted towards the foothills of the Himalayas. This shift has contributed to what is termed as “break monsoon conditions,” which refers to interruptions or pauses in the monsoon rainfall pattern. As a result, the monsoon rains, which are crucial for agricultural activities and water resources in India, are expected to be negatively affected.
While the cumulative monsoon rainfall since June 1 had initially been considered normal, with a surplus of 7% above-normal recorded last week, the recent developments suggest that this surplus has been wiped out. The lack of significant weather developments over the Arabian Sea and the Bay of Bengal has raised concerns, particularly for several states in the Northwest, Central, and South Peninsula regions.
The potential impact of a weakening monsoon has implications for various sectors, including agriculture, water availability, and overall economic activity. Adequate monsoon rainfall is crucial for the planting and growth of crops, as well as for replenishing water reservoirs and supporting rural livelihoods.
The observations by Skymet highlight the intricate and often unpredictable nature of monsoon patterns, which play a vital role in India’s climate and economy. These developments underscore the significance of accurate weather forecasting and monitoring, as well as the need for adaptive measures to address potential challenges arising from shifts in monsoon behavior.
Skymet has indicated that there could be some relief from the harsh impact of the El Niño phenomenon in India due to the expected presence of positive Indian Ocean Dipole (IOD) conditions during the second half of August and September. The Indian Ocean Dipole is another climate phenomenon that can influence monsoon patterns in the Indian subcontinent. While the IOD’s influence might mitigate the effects of El Niño to some extent, Skymet also mentioned the possibility of the monsoon ending with below-normal rainfall.
The dynamics of these climate patterns are complex and can have varying impacts on regional weather, making accurate forecasting and monitoring crucial for anticipating potential outcomes.
In a related development, Malaysia’s crude palm oil production saw a significant increase of 11.2% in July, reaching 1.61 million metric tons compared to the previous month. Additionally, palm oil exports rose by 15.5% to 1.35 million metric tons, while exports of biodiesel surged by 30% to 16,801 metric tons during the same month, according to data from the Malaysian Palm Oil Board.
These figures reflect changes in the palm oil industry and highlight the significance of global trade and production dynamics, particularly in the context of agricultural commodities.
Overall, these updates emphasize the interconnectedness of various factors, including climate patterns and economic activities, and the need for careful analysis and monitoring to assess potential impacts and outcomes.
Palm oil serves a dual role as both a cooking oil and a raw material for biofuel production. The total stocks of palm oil in Indonesia increased by 0.7% month-on-month to reach 1.73 million metric tons as of the end of June. This figure represents the highest stock levels since February.
Malaysia ranks as the world’s second-largest producer of crude palm oil, following Indonesia. Notably, India stands as the largest importer of edible oils, highlighting the significance of palm oil as an essential component of India’s edible oil imports.
Shifting focus to foodgrain stocks in India, the Centre’s stock of foodgrains held by the Food Corporation of India (FCI) witnessed a decrease of 4% compared to the previous year, amounting to 52.3 million metric tons as of August 1. In comparison to the previous month, foodgrain stocks experienced a decline of 6%. While wheat stocks saw a year-on-year increase of 5.2%, they decreased by 7% month-on-month, reaching 28.0 million metric tons as of August 1, according to data from the Food Corporation of India.
These developments in foodgrain stocks are indicative of the changing dynamics of food production, supply, and demand within the country.
Collectively, these updates underscore the intricate global network of agricultural production, trade, and consumption, highlighting the importance of monitoring and analyzing these trends to ensure food security and address potential supply chain disruptions.
The Food Corporation of India (FCI) has reported a decline in rice stocks stored in its godowns. Rice stocks fell by 13% on a year-on-year basis, amounting to 24.3 million metric tons. On a monthly comparison, rice stocks decreased by 4%.
In the 2023-24 rabi marketing season (April to March), the government has procured 26.2 million metric tons of wheat, which is a notable increase from the previous year’s procurement of 18.8 million metric tons. Furthermore, in the 2022-23 kharif marketing season, the government procured 56.8 million metric tons of rice, as per FCI data.
In a bid to manage stocks and ensure an adequate supply of essential food items, the government has announced plans to release additional quantities of wheat and rice through the open market sales scheme in the 2023-24 fiscal year. Specifically, an extra 5 million metric tons of wheat and 2.5 million metric tons of rice are slated for release through this scheme.
The government has affirmed that, despite these planned releases, it currently possesses sufficient stocks of wheat and rice. This assurance underscores the government’s commitment to maintaining food security and meeting the country’s food needs, even as it manages stock levels and distribution.
These measures and updates highlight the complexities of managing foodgrain stocks, procurement, and distribution to ensure that the population has access to essential food items and that supply remains stable.
