COMMODITY OUTLOOK AND

SITUATION ANALYSIS

Weekly Report 14 – 20 July, 2019

Basmati price down 12% on higher acreage, no fresh payments from Iran

Basmati rice has become cheaper 12 per cent during the past

one month due to an increase in the area under cultivation and

cessation of fresh payments from US sanction-hit Iran, the largest

buyer of India’s aromatic rice. The fair average quality (FAQ)

variety is currently quoting at Rs 72 a kg in the benchmark physical

Delhi wholesale market, as compared to Rs 82 about a month ago.

With satisfactory progress of monsoon rainfalls prompting

farmers to bring in additional area under basmati sowing, prices

are set to fall lower going forward. The

ongoing payment stoppage by Iranian

importers may pare India’s basmati exports

to that country, which is facing economic

sanctions from the United States.

“Indian exporters are currently executing old orders. Hence, there

is no export problem as of now. But, importers in Iran have stopped

fresh payments for the past one month, bringing new orders to a

complete halt. As long as advance payments to their accounts

continue, exporters would face no issues. But, fresh exports would

be difficult. Indian markets have already started responding to

Iran’s payment stoppage, and basmati prices shed Rs 10 a kg or 12

per cent the past one month,” said Sushil Jain, Vice President, All

India Rice Exporters’ Association (AIREA).

Informed sources said advance amounts of Rs 1,800 crore

received from Iranian importers are lying in various banks

accounts held by the Iranians in India. India’s basmati

rice exporters would continue till payments from these accounts

are exhausted. “Basmati prices have declined in the last one month.

But, future price movement would depend upon the progress of

this year’s monsoon rain and farmers’ interest in sowing of basmati

paddy,” said Anand Goyal, Owner, Akash Rice Mills, a Delhi-

based basmati rice miller, trader and exporter.

Meanwhile, India’s two commodity exchanges, National

Commodity & Derivatives Exchange (NCDEX) and Indian

Commodity Exchange (ICEX) have started futures trading in 1,121

varieties of basmati. The ongoing uncertainty and price volatility

offer immense opportunities for traders, exporters and rice mills

to hedge their price risk in

futures.

Being a compulsory delivery

contract with small trading

unit of 10 tonnes and basic

delivery centres in Karnal and

Haryana, basmati paddy is

trading at about Rs 42 a kg in

the futures market. “Apart from the Iran issue, Indian basmati rice

exporters are also facing phytosanitary issues with the European

Union, which poses a threat to ongoing exports. While there arr

negotiations with the European Union on pesticide residue issues,

overall basmati exports may decline this year,” said Gurnam Arora,

Joint Managing Director, Kohinoor Foods Ltd, the producer of

Kohinoor brand basmati rice. Basmati prices have been volatile the

past few months. Prices fell when the US withdrew the waiver on

India's dealings with Iran, then rose and are falling again.

Sanjit Prasad, MD & CEO, ICEX, said, “Basmati exhibits large

price volatility, and could impact market participants to the point

of business closure. The futures contracts in 1,121 varieties will

help them deal with price uncertainty.” India produces some 6.5

million tonnes of basmati rice, two-thirds of which are exported.

Iran is the largest buyer of basmati rice, contributing nearly 25 per

cent of India’s annual basmati exports.

High Demand, Low Stock Stoke Grain Prices

New Delhi: Lower stock of maize, bajra and broken rice and higher

demand of wheat and soya bean have increased the prices of these

commodities in recent weeks. Maize is up almost 25% in a month

while broken rice and wheat have gained 8% in the past two

months in the spot market. Grains prices also have an impact on

both poultry and cattle feed. Higher prices of the grains prompted

dairies to increase the price of milk both for consumers and

farmers who sell it.

“There is shortage of maize, bajra and broken rice, which we

expect will continue till the new crop is harvested in October-

November,” said Ramesh Chandra Khatri, president of Poultry

Federation of India. Chicken is selling at ₹200 a kg in retail while

farmers are getting ₹60-75 a kg, he said. Maize prices has increased

by almost 25% within one month to ₹22 per kg, wheat and broken

rice by 8% to ₹20 per kg and ₹22 a kg in the past two months, bajra

by 10% in last two months to ₹21and soya bean de-oiled cake by

5% to ₹33 a kg in the spot market, said Khatri. According to the

industry, the ripple effect of shortage of maize, mainly because of

drought, pest attacks and significant reduction in cultivable areas

last year across Maharashtra and Karnataka, continues. “Last year,

production was 2.5 million tonnes less than the annual

requirement of 23 MT. This has led to firm prices of maize and

simultaneously boosted demand and price of other grains used is

the feed sector,” said Prerana Desai, head of research at Edelweiss

Agri Services and Credit. The government move to permit import

of 4,00,000 tonne of feed grade maize at a concessional import duty

of 15% early this month and of over 1,00,000 tonne in June under

advance licensing system has also not helped in easing down the

prices, said analysts.

Supply shortage raises veggie prices in wholesale markets in Mumbai, Delhi

Vegetables prices in Mumbai and Delhi wholesale markets

increased in July after supply fell because of poor rainfall in

western India and floods in Bihar and the north-east. Hybrid

tomato in the Mumbai wholesale market was selling at Rs 18 a kg

on Wednesday--a 50 per cent

rise from early this month. The

price of locally-grown tomato in

the Delhi wholesale market

increased by 82 per cent to Rs

30.50 a kg on Wednesday

compared to the price early July.

Cabbage, cauliflower, brinjal prices too have sharply increased,

worrying policy makers and consumers alike.

“While some pockets in Maharashtra have received good rainfalls

this monsoon season,

major vegetable

supplying regions

including Nashik

remained deficient.

Farmers were quick to

assess deficiency after

almost three weeks of

delay in the onset of monsoon rains this year. Consumers would

have no respite from high vegetables prices till widespread

monsoon rainfalls resume across major producing regions,” said

Anil Chavan, secretary of Agricultural Produce Market Committee

(APMC) in Mumbai. Sources said farmers in Maharashtra are

reluctant to start sowing after many of them lost crops in some

parts of Maharashtra last year when rains failed. Farmers in other

parts in the state could not harvest vegetables after the first round

of picking, resulting into crop failure of over 50-60 per cent.

“Consumers are unlikely to get respite from high vegetables prices

for over a month. Farmers, who have sown seed with the onset of

the monsoon rainfalls, will get the first output in the next 45 days

with an average crop cycle of 90 days. Hence, vegetables supply is

going to boost only in 30-45 days,” said Shriram Gadhave,

president of the Pune-based Vegetable Growers Association.

Vegetable supply from Uttar Pradesh and Bihar is poor because of

heavy rainfall and flood in the two states respectively.

Cauliflower supply, for example, slumped to 18.2 tonnes on July 17

compared to 22.5 tonnes in the beginning of the month. Bitter

gourd supply fell to a 2.6 tonnes from 6.1 tonnes. Retail vegetable

markets, however, have not been impacted as price movement

from the wholesale market takes about a week to spill over.

Meanwhile, vegetables demand is going to pick up during the holy

month of Shravan amid supply concerns. Data compiled by the

Indian Meteorological Department (IMD) showed 14 per cent

deficiency in cumulative rainfalls during the period between June

1 and July 10. With the rainfalls have started gradually improving,

the overall sowing of vegetables is likely to improve in the weeks

to come.

Mother Dairy to sell tomatoes at Rs 40/kg in Delhi to contain price rise

The Delhi government has also been asked to "exhort traders

and logistic providers to increase the supply of tomatoes to the

mandis to ensure immediate control of price rise," the Union

Consumer Affairs Ministry said in a statement.

In a bid to check rising tomato prices

in the national capital, the Centre

Friday asked state-owned Mother

Dairy to boost its availability and sell

the key kitchen staple at Rs 40 per kg.

The Delhi government has also been

asked to “exhort traders and logistic providers to increase the

supply of tomatoes to the mandis to ensure immediate control of

price rise,” the Union Consumer Affairs Ministry said in a

statement. A decision in this regard was taken by a high-level Inter-

Ministerial Committee meeting chaired by Consumer Affairs

Secretary Avinash K Srivastava, it said. Tomato prices in the retail

markets of Delhi-NCR have shot up to Rs 60-80 per kg owing to

supply disruptions following rains in key producing states. “It was

indicated by Horticulture Division that the situation is only

momentary and augmenting of supplies which has commenced

shall further increase. Due to the rains the supply of tomatoes in

the market, which was delayed, will be back to normal,” the

ministry added. The committee, which reviewed the price and

availability of tomatoes in Delhi with stakeholders, observed that

prices rose sharply since July 10 and took two decisions to

immediately control the rise in prices. Firstly, Mother Dairy has

been directed to immediately begin selling quality tomatoes

through its retail outlets at Rs 40 per kg. It has also been asked to

increase the supply in the market to ensure that quality tomatoes

are available to consumers at lower prices. Secondly, the Delhi

government’s Food and Civil Supplies Department has been

instructed to exhort traders and logistic providers to increase the

supply of tomatoes to the mandis to ensure immediate control of

price rise. Mother Dairy sells fruits and vegetables in about 100

Safal outlets in the Delhi-NCR region.

Project to empower women in agriculture

Training in bee rearing and millet cultivation also proposed

The FICCI Ladies Organisation (FLO) recently launched a project to

empower women in agriculture and is working on key three

initiatives. Harjinder Kaur Talwar, national president of FLO,

told The Hindu on Wednesday that “FLO Agriculture Initiative” was

launched in April this year in association with the Union Ministry

of Agriculture. Of the total women population in the country, 71 %

is associated with agriculture.

They need to be trained and

empowered. At the policy-level,

the Organisation is trying to

talking to two States for

amendments in the laws

concerned so that women who

take up agriculture can be classified as farmers and can avail of all

the benefits. It also tied up with a non-governmental organisation

to train women hailing from Telangana, Rajasthan, and Madhya

Pradesh in extracting and preserving custard apple pulp. “We will

talk to ice cream makers and work on a tie-up so that they can buy

the pulp to make ice creams,” she said. Another initiative is to train

women in bee rearing. It was started on a pilot basis in Ludhiana

and will be launched across the country by the end of next month.

“Our international delegation this year will visit Israel to study its

technologies in agriculture. Israel has a few centres of excellence in

agriculture in India. We will look at technology transfer and

training women in agriculture technologies,” Ms. Talwar added.

Another project to be launched nation-wide is training of young

girls in Information Technology. “The aim of FLO is to empower

women economically. Young girls will be trained to become

employable. This will be done by all the FLO chapters. The plan is

to train 1,000 young women this year.”

The Organisation also conducts workshops and programmes

for professionals. It will conduct sessions for women who are

members of Corporate company boards and train women to

become members. It will host on its website the names of women

whom it has trained. Poonam Bafna, chairperson of FLO

- Coimbatore, said it plans to launch soon programmes for women

in the district in bee rearing and millet cultivation. With investment

opportunities present across the country, the organisation

members wants to know about the potential and opportunities

here. The two-day FLO programme here on Thursday and Friday,

with 157 participants from other States, also has an expo of

products made by the Organisation members. Inaugurating the

event, District Collector K. Rajamani said the district is unique and

has opportunities for growth in healthcare, education,

manufacturing, and textiles.

Assam tea output may drop 8% on rain,

floods

Kolkata: Tea production in Assam is expected to decline 8 per

cent this year owing to heavy rainfall and floods, said planters

and industry executives. It has been raining incessantly in the

north eastern state for the past

10 days and planters fear that if

this situation continues for

another week, output will be

further hit.

Assam’s tea estates produced 645.14 million kg of tea in 2018,

accounting for nearly 49 per cent of the country’s production of

1,338.63 million kg. “Heavy rains in July, coupled with floods, will

bring down production by 8 per cent. But if the rain does not stop

within the next five-seven days, crop loss will be more,” said Vivek

Goenka, chairman, Indian Tea Association. “Information trickling

in from planters reveals that the tea estates located close to the

Brahmaputra river have been flooded and the crop loss may be as

high as 15 per cent, particularly in these estates.”

The situation in Assam deteriorated this week as floodwaters

submerged 153,211hectares of farmland in 30 districts. About 90

per cent of Kaziranga National Park is inundated. “Excessive rains

in July will take a toll on crop size,” said DP Maheshwari, managing

director, Jayashree Tea & Industries. “There is no sunshine at all

and, even if it is not raining, the sky is overcast with clouds. In July,

bushes require a temperature of 35 degrees for producing teas. But

the temperature is much lower now due to rains.” Although

planters are upset over the loss of crop, black tea prices may move

up in the coming months as there will be less supply. Prices of

common variety black tea or CTC have remained depressed this

year.

Source : Verbatim reproduced from different sources