Higher water levels in reservoirs, more-than-normal rains in the
current summer season and expectation of a good monsoon have motivated farmers
to increase the pre-kharif area under crops like paddy, moong, maize, bajra and
groundnut, resulting in a 36% year-on-year rise in crop area so far. This
was possible owing to the heavy rains which happened due to heavy rains towards
the end of rabi season. The cropping sentiments were also boosted by the IMD
forecast of Normal Monsoon for the year 2020-21. The advancement of monsoon in
most part of the country about a week to 10 days ahead of scheduled date has
also boosted the sowing sentiments.
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Tuesday, 30 June 2020
Reasons behind Increased Sowing in Current Kharif Season 2020-21
Saturday, 13 June 2020
Copper Moves on After Confronting Covid-19 & Looming Economic Recession
The global copper market is going through an unusual period in history
as the coronavirus pandemic has unleashed a series of unprecedented events
affecting every industry. As part of the new emerging geographic scenario, the
United States is forecast to readjust to a 0.9 per cent CAGR. Within Europe,
the region worst hit by the pandemic, Germany is likely to add over 53.7 thousand
MT to the region’s size over the next 7 to 8 years. In addition, over 65.1 thousand
MT worth of projected demand in the region is expected to come from Rest of
European markets. In Japan, the Electrical & Electronics segment is likely
to reach a market size of 549.7 thousand MT by the close of the analysis period.
Blamed for the pandemic, significant political and economic challenges confront
China. Amid the growing push for decoupling and economic distancing, the
changing relationship between China and the rest of the world is expected to
influence competition and opportunities in the global Copper market. Against
this backdrop and the changing geopolitical, business and consumer sentiments,
the world’s second largest economy will grow at 3.9 per cent over the next
couple of years and add approximately 1.2 Million MT in terms of addressable
market opportunity. Continuous monitoring for emerging signs of a possible new
world order post-COVID-19 crisis is a must for aspiring businesses and their
astute leaders seeking to find success in the now changing copper market
landscape.
Apart from the Electrical & Electronics segment, the construction
and manufacturing sector is also showing signs of recovery. Economic data is
signalling a robust recovery in the Chinese construction and manufacturing
sectors during the second quarter. Demand for copper in China, where half the
world’s output is consumed, has picked up significantly since Beijing eased its
lockdown in March. As its economy has clicked back into gear, physical
premiums — the extra price buyers pay to take delivery of the metal immediately
— have risen sharply while inventories have plunged as manufacturers scrambled
for supply. The closely tracked utilisation rates at wire rod mills — which
account for two-thirds of China’s refined copper consumption — have rebounded,
hitting 90 per cent in April. Thus, we can clearly see signs of economic
recoveries in different parts of the world, though the pace of recovery is too
varied in different economic locales.
The decision to keep Chinese factories shut after the Lunar New Year
sent shudders through the massive mines of Brazil and Chile that feed them. So
far, mining heavyweights like Vale and Codelco have managed to continue
operating through the outbreak, adopting safety measures without stalling
output. Other mines in the region that did shut are now reopening. Now, with
China getting back to work and Latin America the new virus hot spot, concern is
shifting from demand to supply. Alarm bells are starting to ring again in metal
markets as the outbreak explodes in Latin America, with the region’s highly
urbanized population of 600 million accounting for about 40 per cent of daily
deaths globally. That’s coming at a time when Chinese demand is recovering and
markets tighten. Chile is the top exporter of copper and Brazil is the
second-largest shipper of iron ore. So far, mining heavyweights like Vale and
Codelco have managed to continue operating through the outbreak, adopting
safety measures without stalling output. Other mines in the region that did
shut are now reopening.
The positive in the market is stiff recovering of the Chinese economy. The
focus is on recovering activity in China rather than downturn in the rest of
the world. Beijing’s stimulus package, centred on “new” infrastructure such as
electric vehicle charging points, should be positive for copper demand. China’s
continued strong imports and relatively flat global exchange stocks reinforce
the positive optics. Unsurprisingly, given the level of lockdown disruption in
key producer countries such as Peru, global mine supply is expected to fall by
4 per cent this year. That will translate into a 2.4 per cent drop in
production of refined metal. A surplus of copper isn’t obvious right now.
Global exchange stocks currently total 461500 MT, which is only 549000 MT
higher than this time last year. Rises in LME and CME inventories have been
almost totally offset by declines on the Shanghai Futures Exchange, where
registered stocks have fallen by 219000 MT over in April and May. Post
lockdown, China’s consumption of refined copper improved by about 4 per cent at
1.19 million MT in the first four months of the year, although higher import
flows may be partly down to a near collapse in scrap supplies. Imports of
copper scrap totalled just 292,400 tonnes in January-April, down 43 per cent on
last year.
One should always remember that China consumes over 45 per cent of the
global copper. The current concern is the slowing demand signs in the Chinese
market. Although Beijing’s latest stimulus package ticks a lot of copper boxes,
there is absence of liquidity flood and construction boom such as seen a decade
ago. Then there is the problem of what China is going to do with all the
copper-containing products, such as air-conditioners and white goods, it
normally exports. The coronavirus’ second-round hit on demand, in the form of
Western consumer appetite, looks set to be bigger than the direct impact of
lockdowns. China’s factories suffered a collapse in export orders in April,
according to both official and Caixin Purchasing Manager’s Indices. Weak
exports are the point of maximum weakness for China’s copper sector, although
it could take several months before a build in product inventories works its
way back up the value chain to the refined metal segment. Moreover, the fear of
resurgence of US – China trade war, which seems to be a reality, given the
aggressive postures taken by China on several geo-political fronts.
During the current pandemic era, copper demand from the top consumer China has fallen by 2.8 per cent to 11.87 million MT this year but is expected to rise by 2.6 per cent in 2021. Demand from other key consumers like Europe, North America including US, Canada and Mexico is also expected to deteriorate this year. Going forward, a swift turnaround in demand is least expected. Global industrial activities remain on the lower side due to the negative impact of the pandemic. The copper market is expected to find more support Global reported refined copper demand in 2019 was 23.915 million MT, up 25 thousand MT on that for 2018. For 2020 the forecasts suggest that refined copper demand might be 22.625 million MT, a decrease of 5.4 per cent. For 2021, demand for refined copper might increase by 4.4 per cent to 23.625 million MT. Looming tensions between US and China is likely to worsen their trade relations further that may on weigh demand from the world’s largest Copper consumer China. In spite of the pick-up in Chinese industrial activity and mine disruptions, it is still expected that copper supply would outpace demand for this year — the most significant annual market surplus since the global financial crisis since 2007-08. Beijing’s stimulus package, centred on “new” infrastructure such as electric vehicle charging points, should be positive for copper demand. Chinese government stimulus and backlog orders accumulated during the coronavirus-fuelled lockdowns have supported copper demand in top consumer China, while stimulus measures and reopening of economies in the West have also boosted investor sentiment. China’s continued strong imports and relatively flat global exchange stocks reinforce the positive optics.
Tuesday, 2 June 2020
NBHC’s Final Rabi Crop Estimates for 2019-20
The rainfall during the months of
June-September was at 10 per cent above average. Rainfall over the country as a
whole during the SW monsoon season (June-September), which is the principal
rainy season of the country, was normal (110 per cent of LPA). The 2019
northeast monsoon season (October-December) rainfall over the country as a
whole was above normal (129 per cent of LPA). Live storage in 123 major
reservoirs as on 21 May 2020 was 60.73 BCM as against 36.15 BCM on the same day
last year (21 May 2019) and 37.58 BCM of normal (average of the last 10 years)
storage. Current year’s storage is 168 per cent of last year’s storage and 162
per cent of last 10 year’s average storage. Unseasonal rains, thunderstorms and
snowfall across certain pockets in the country in Feb- March had led to damage of
standing Rabi crops - wheat, mustard and gram as over 60 per cent precipitation
were concentrated in north-western and central India. In India, Rabi harvesting
starts in March in Gujarat, Madhya Pradesh, Rajasthan and Maharashtra and in
April in Punjab, Haryana and Uttar Pradesh. The Government announcement of the
lockdown came right in the middle of this rabi harvesting season. They did
exempt farm activities from the lockdown but the shortage of labour and lack of
transport facilities is expected to impact the rabi crop adversely. Keeping in
consideration the large-scale post monsoon developments and the sowing reports
from various parts of the country, NBHC Pvt. Ltd. has come up with its Final
Rabi Crop Estimates for 2019-20.
In our first estimate (First Rabi Crop
Estimates for 2019-20 – 11th February 2019) we had
broadly concluded that in the year 2019-20, the production of total pulses and
oilseeds are expected to decline by 2.22 per cent and 13.48 per cent over 2018-19.
In the current assessment, the Pulses and oil seed have marginally pushed
themselves further in the negative region with an expected decline of 4.58 per
cent and 6.58 per cent over the last estimate.
Wheat production is expected to fall further
by 3.12 per cent over last estimate as delayed harvesting has led to a fall in
yield and further delays in procurement exposes the crop to untimely rains but would be still higher by 5.61 per
cent over last year mainly because of increase MSP coupled with the surplus
monsoon and post-monsoon rain in October boosted soil moisture levels. Rice
production is expected to increase marginally by 3.17 per cent over last
estimate amidst reports of
higher yield in Telangana but would still be lower by 25.67 per cent over last
year owing to marginal shift in farmer’s focus to
pulses & wheat. Maize is expected to decline further by 2.17 per cent over last estimate leading to overall fall in
production by 0.99 per cent over last year. Jowar production is expected to improved
further by 2.62 per cent over last estimate leading to overall increase
in production by about 23.57 per cent over last year.
Pulses production is projected to drop further by 4.58 per cent over
last estimate, which is 2.22 per cent lower than last year’s production mainly
due to 10.85 per cent drop in the gram production, which constitutes about 70
per cent of the total Rabi Pulses. Gram production is expected to decline further
4.87 per cent over the last estimate mainly due to fall in Madhya Pradesh as
lot of area under gram was diverted for wheat cultivation. Urad, Masoor and
Field Pea are also expected to decline by 2.00 per cent, 2.17 per cent and 5.00
per cent respectively over the last estimate.