Copper Prices Dwindling with Profound Weakness amidst Global Uncertainties

Domestic Scenario

India is among the top 20 major producers of copper globally. Over 30 per cent of India’s copper demand comes from the telecom sector and 26 per cent from the electrical sector in India. In addition, the building and construction, engineering, transport and consumer durables sectors are major consumers of copper in India. These sectors stand to benefit the most from lower prices of copper. During the last few years, India’s switch from net importer to exporter is due to a rise in production by three companies: Sterlite Industries, Hindalco, and Hindustan Copper. Hindalco and Sterlite industries account for more than 80% of India’s total copper production. The Indian industry imports raw copper from Chile, Indonesia, Australia, and Canada and exports finished products to various destinations. 

International Scenario

Mine production rose 715,000 MT or 4.5 per cent to 16.023 million MT in 2012 from the previous year, according to the ICSG. There were increases in China (26 per cent) DRC (21 per cent), Mexico (18 per cent), Peru (five per cent) and Chile (three per cent), which more than offset declining output in Indonesia (26 per cent) and Australia (four per cent). The average world mine capacity utilisation rate climbed to 82 per cent in 2012 from 80.6 per cent in 2011. Refined output increased 485,000 MT or 2.5 percent to 20.132 million MT in 2012 compared with 2011, with primary output up 2.3 percent and secondary output up 3.3 per cent. The main increases came from China (11 per cent) via new capacity; Japan (14 per cent), where the industry recovered from the 2011 earthquake and tsunami, and the DRC (28 per cent), where new capacity was brought on line. Output declined six percent in Chile, three percent in the US and 45 per cent in the Philippines after a fire at the country’s sole smelter. Capacity utilisation dropped to 79 per cent from 80.6 per cent in 2011.

Price Trend Analysis

In late 2012 and early 2013, optimism was running high that the US economic recovery would continue and that China would move into recovery mode too. On the strength of that, metal prices ran higher while investment interest picked up. Although US data has tended to remain upbeat, Chinese data has been less constructive and a recovery in demand during the first quarter has proved to be fairly elusive. This forced a reappraisal of the outlook for commodity demand and a corresponding correction in prices. The market was in a deficit of 3,40,000 MT in 2012, according to preliminary data from the International Copper Study Group (ICSG), but it had swung into a surplus in October and remained in one for the whole of the fourth quarter – totaling 2,37,000 MT.

How 2013 turns out is likely to be determined by the extent to which consumers feel the need to restock. Manufacturing PMIs have become quite mixed – the US ISM number climbed to 54.2 in February from 53.1 in January and 50.7 in December but then dropped to 51.3 in March, which suggest the US recovery is still stop/start. Copper has had some of the tightest fundamentals of all the metals in recent years, which is no doubt why prices have managed to hold so far above the marginal cost of production. On paper, the market looks set to move into a supply surplus in 2013, which should in theory put downward pressure on prices; indeed, that seems to have been unfolding in recent months.

Estimates & Price Forecast

China runs a structural copper deficit, with refined consumption of around 8.8 million MT and refined production of around 5.6 million MT; it seems unlikely that much of the Chinese stockpile will leave the country. Asia is accounting for 87 per cent of the increase in capacity – the China, India, Indonesia and Iran totals will all increase. Refined capacity would reach 30 million MT per year by the end of 2016, a rise of 18 per cent from 2012. The price of copper is likely to remain in tight range for the year 2014 with predominant weakness. Any rise in the price would be a level to sell fresh in futures. The range of the Indian MCX would be INR 484 on the higher side with possibility of its tumbling to INR 340 & below in 2014.

Gold Glitter Likely to Dominate the Investment World in 2014

Demand for gold is one thing to look at but the other essential part of the equation with metals is supply - mines are expensive and time consuming to build. When it comes to the precious metals there is also monetary demand as some Central banks look to increase their gold reserves as a hedge against currency weakness. The Gold producers have been closing forward contract sales of gold over the last few years and this has accelerated during 2007 as giant losses mounted. The biggest operators in the industry are closing these hedge books with loans, early physical supply of gold and out of revenue.

It’s impossible not to conclude that central banks, commercial banks and wealthy individuals have, are, or will attempt to manipulate gold prices -it is in their interests. For central banks, it has been done in attempts to wean investors off the idea that gold is money and onto the concept that government-issued currencies are the only real money.

Chinese buying of gold in a big way can also be a form of manipulation. We will never be given accurate statistics on Chinese gold buying unless it suits them for us to know. What’s clear is that they have managed to acquire between 2,000 and 2,800 tonnes of gold in 2013, while the price of gold has been dropping.

In the recent times, impelled by the sentiments from the announcement of the US Federal Reserve to scale back its controversial monthly bond buying program, commodities across the globe are trading mixed. The Federal Reserve Chairman Ben Bernanke in his last FOMC meeting yesterday said that the US apex bank will reduce the pace of its asset purchases to $75 billion from $85 billion a month, starting from January 2014. Spot gold extended previous day’s southward action and dropped to the lowest point in six months, breaking the psychological level of $1200 a troy ounce.

Is spite of the sharp drop in the gold prices I feel that the bulls are eventually going to win over bears amidst weakening dollar and increased hedge demand from currency traders and Central Banks. The best time to buy gold is when the market hates it. As per my analysis the global market is having a very firm support a $1168 a troy ounce and has good potential to shoot above 1250 in the coming 3-5 weeks.

Guar Seed: Steep Price Upsurge Expected after Massive Plunge

 Supply & Demand Scenario

India continues to be the leading producer of guar seed in the world with a total share of over 80-85 per cent of the global supply. The country’s guar seed production for the year 2012-13 is estimated to be 1.6 million MT against 1.25 million MT last year. The biggest producer of guar seed in the country continues to be Rajasthan (83.37 per cent) followed by Haryana (13.08 per cent). Other major producers of Gaur seed in the country are Gujarat (3.38 per cent), Punjab (0.18 per cent) and Uttar Pradesh (0.09 per cent). The opening stock for the next season will be 60 lakh MT while the total supply is estimated to be 2.0 to 2.2 million MT.

The consumption pattern of guar seeds is largely influenced by the demands from the petroleum industry of United States of America and the oil fields in the Middle East as the derivative products of these seeds are quite useful in the petroleum drilling industries.  The USA is the largest consumer of guar gum with an annual consumption of 45,000 tonnes which represents 25 per cent of world trade. Germany & Japan consume another 23 per cent with the UK, Denmark and the Netherlands combining take further 22 per cent of world trade. With the recent surge in the prices of guar seed to over Rs. 25000, the major importing nations have resorted to new synthetic products leaving the guar exporters in a fix.

Price Trend Analysis

The guar seed spot market price variation study indicates that the prices have always been declining since the re-launch of the futures trade in Indian Exchanges. Exports which touched record 7.07 lakh MT in FY 2011-12, declined in FY 2012-13 as US, the largest importer of Guar gum has stocked huge inventories. During the FY 2012-13, guar gum exports stood at 4.58 lakh MT during April 2012-February 2013. This situation is likely to change in the coming months as the prices have already corrected over 60 per cent in the recent months. The market is also finding support from the traders owing to increased demand from the stockiest and global industries. The Indian market is expected to find strong support at the levels of 3900-4000 and has good potential of reaching 7000 and 9000 on the higher side.

Rapeseed / Mustard Preparing for a Sharp Upsurge from Current Levels

Supply & Demand Scenario

India’s rape seed production in 2012-13 is estimated at around 78.20 lakh MT, up from around 66.04 lakh MT produced in 2011-12. About 62.40 per cent of the total production for the country was contributed by 2 states. The top rapeseed producing states of the country are Rajasthan (47.05 per cent) and Uttar Pradesh (15.34 per cent). Rape seed being a Rabi crop, sown during October to December is highly dependent on good monsoon. This year, good rainfall received during the current monsoon season in major producing regions will certainly provide the required soil moisture during the sowing period. The upcoming season is likely to witness a production of around 6.5 to 7.5 million MT. India holds second position in the major rape seed consumers list after China.

Global production of rapeseed in 2013-14 is projected to increase 4 percent to 63.4 million MT due to improved crops in the EU-27, Canada, Ukraine, Russia, and India. After declining in 2012/13, the growth in international trade of rapeseed could resume. Based on a 5-per cent increase in the 2013/14 area to 6.5 million hectares, EU-27 rapeseed production is projected rising to 20 million MT from 19.1 million MT last year. However, low global stocks of rapeseed are likely to persist as consumption may outpace the increase in total supplies. Even with a bigger crop, EU rapeseed imports for 2013-14 may stay level at 3.1 million MT. Additional imports would probably come from Ukraine, which is likely to support the global prices.

Price Trend Analysis & Forecast

The rape seed market price variation study indicates that the price volatility is on the rise since May 2006 owing to reports of higher seasonal demand. Looking at the seasonal trend Rapeseed prices tend to remain strong during the months of August through December amid the strong crush demand for seed during the festive season and slackening crop arrivals. European Union continues to be the major importer of RM seed and RM seed oil with an expected hike of 38.64 per cent and 14.58 per cent respectively. Thus it is expected that with the reports of shrinkage in production and enhancement of demand, the global prices of rapeseed will find increased support from the European Union in 2013. Moreover, Additional imports are likely to come from Ukraine. Based on a sharp increase in area (up 54 per cent to 1 million hectares) and low winterkill, the Ukraine rapeseed crop is expected to swell 43 per cent in 2013/14 to 2 million MT. Almost all of Ukraine’s additional rapeseed production would be used to expand exports to 1.9 million MT.

The spot prices at Jaipur are gradually moving upward due to support from the increased meal demand from the south-east Asian countries. The Indian market is expected to find support at Rs. 3200 per quintal and has good possibility of testing Rs. 4200 & 4550 in 2014 on the higher side.

Soybean Complex: Awaiting a Sharp Uptrend

Soybean has been the major component of the oil seed crop for India. Of the total nine oilseed crops production it contributes to about 35.00 per cent. In recent times the stock management of soybean and enhanced demand is imposing serious challenge for the country owing to the prevalent economic crises in European Union and improving demand in the global markets. There is a need for an effective price and stock management strategy in order to achieve maximum advantage of the expected price hike.

India’s Soybean production in 2012-13 is estimated at around 127.32 lakh MT, up from around 122.14 lakh MT produced in 2011-12. India’s support prices in 2013-14 are hiked by about 14 per cent from the levels in 2012-13 with MSP of Rs. 2500 per quintal for black soybean and Rs. 2560 per quintal for yellow soybean. About 93.92 per cent of the total production in the country was contributed by 3 states. The top soybean producing states of the country are Madhya Pradesh (52.03 per cent), Maharashtra (32.63 per cent) and Rajasthan (9.26 per cent). India holds second position in the major soybean oil consumer’s list after China. The Indian government has imported 8.54 million MT of edible oil in the marketing year 2012-13 (October – September) out of which about 0.85 million MT was soybean oil.

Global soybean production is projected almost unchanged at a record 281.7 million MT as larger crop forecasts for Brazil and Paraguay mostly offset reductions for the United States, Canada, China, and Russia. Soybean production for US is 85.7 million MT, Brazil is forecasted to produce a record 88 million MT, up 3 million MT on increased area. Argentina is expected to reach 54 million MT and soybean production for China is reduced 0.3 million MT to 12.2 million MT, with lower yields resulting from excess rainfall and flooding in the northeast. If realized, this would be China’s smallest soybean harvest since 1992-93.

The soybean market price variation study indicates that the price volatility is on the rise since June 2010 owing to reports of higher seasonal demand. Looking at the price trends of the past years, the prices tend to decline during the June-Sep. period on increased hopes of higher oilseed sowings in Kharif and across northern hemisphere oilseed growing countries. The surge in demand starts towards end October and reaches peak by May.  In 2012-13, the Indian Soybean prices have followed similar pattern from the current levels following increased demand from Chinese traders. The demand side is bullish. The USDA is forecasting a 4% increase in U.S. exports, but export commitments to date show that sales are ahead by 15.8%. The entire anticipated increase comes from China. The estimate for Chinese imports is 69 million MT, up 9.5 million MT, or 16 per cent from last year.

India’s soybean production for the crop year 2013-14 (July - June) is expected to reach around 104.50 Lakh MT. The expectation of a lower crop and increased export demand (over 10 million MT) is expected to keep the prices bullish with increased volatility.

Gold –The Only Time Tested Friend for Investors

Like other asset classes, a gold investment is associated with risks. The price of gold can fluctuate strongly in the short term and also in the long term. Over very long periods of time gold does show a high and – from our perspective – unique stability or wealth preservation. However, such periods can be too long for individual investors. On the other hand, for any risk averse investor an addition of gold contributes to the diversification of his/her investment portfolio. Due to the low correlation of gold with other asset classes, a gold investment reduces the (price) risk for the investor and therefore can reduce potential losses. Professional and courageous investors can speculate on a specific gold price development. For safety-oriented investors it is recommended – also in light of the lack of a regular income or interest from a gold investment a form of insurance. Unlike possibly individual stocks, bonds and other securities, gold will never lose its value completely. Conservative investors should invest only a portion of their total assets in gold. From being inherited as a family’s wealth and possession to becoming a part of one’s portfolio, investment in gold has become diverse. While long-term values associated with gold continue even in today’s era, the diversified investment products have, however, brought in immense opportunities for gold bulls. People have been running towards gold investments since 2001 well supported by aggressive rise in consumption levels in India & China.

As far as investment in gold is concerned, a retail investor can hold gold in the following ways – physical form like coins/bars or jewellery, trades on the futures platform, investments in gold ETFs, the spot market platform, gold savings fund and invest in gold-based equity stocks. With an endless list of investment avenues within gold, the investors are being spoilt for choice. Investment in gold ETFs began in 2004 internationally and this gave investors a new approach towards gold investments. SPDR Gold Trust is the world’s largest gold ETF and its holdings have surged from a mere 8 tonnes at the time of inception in November 2004 to above 900 tonnes currently.

Looking at the price trends in gold, prices started the down trend since August 2012. Gold’s ability to stage further price gains for the remainder of the year will largely depend on developments in the US and its labour market which, while still fragile, has shown improvements in recent months. Indeed, particularly since the Fed has tied its QE mandate towards developments in the unemployment rate, the FOMC meetings and the non-farm payroll releases have almost become price trend determining events. The other factors to be closely watched are festival periods for jewellery purchases (particularly in China and India), recent geopolitical tensions in Syria which could lead to a wider Middle East conflict and the proposed Fed tapering of EQ3 which would lead gold to another downside rally.

In the international market, Global mine production in the first half of 2013 increased by 41 MT or 3 per cent, to total 1,416 MT. Geographically, gains were diverse, with notable increases in China, the Dominican Republic, Canada and Russia. Global scrap supply fell by 14 per cent in the first half of 2013 to an estimated 662 MT chiefly as a result of weaker gold prices. Jewellery fabrication jumped up by 22.8 per cent in the first half, in response to a marked decline in gold prices. Net official sector purchase has dropped by 32.0 per cent to 191 MT in the first half of 2013. Producers’ de-hedging has increased, with some miners taking advantage of lower prices to close positions. World Investment plunged by 28.3 per cent to 517 MT in the first half of 2013, the lowest figure since 2009.

The decline in the confidence of investors in gold was also evidently visible in India. The weakening of Indian rupee also weighed on the gold prices with the government undertaking several steps to curb its imports. In spite of all curbs & restrictions, India continues to be the second largest consumer of physical gold in the world with a share of 28 per cent and is next to China which consumes 33 per cent of the world gold production. The World Gold Council expects demand for the yellow metal to touch 900 to 1000 MT in 2013 against 863 MT in 2012 despite government measures to curb demand in a bid to control current account deficit. The demand in the first half this year was at 567 MT. Indian jewellery fabrication jumped by 25 per cent in the first half of the year to almost 350 MT, as demand for jewellery soared in the second quarter in response to the price retreat. Owing to government measures India's gold imports crashed 95 per cent in August 2013 to just 2.5 MT from a July 2013, easing pressure on policymakers as they struggle to contain the depreciation of the Indian rupee to the US dollar.

From the Indian perspective, gold has always been seen as a saviour in times of financial crisis and the pledge or sale of gold has helped investors reap benefits of investments made earlier. Hence, even though the commodity is under stress in the current scenario, the emotional value towards the metal that has been existent since centuries will not be shaken up completely. Although trends in demand patterns will change and the outlook of investors will evolve, the role of gold as an important investment asset will continue in the years to come. In the years 2011 and 2012 gold has again witnessed a decline in demand as sentiments towards the improvement in the US economy have become positive and additionally, investors are now seeking different investment avenues considering the fact that the nature of price drivers that affect gold prices has become very volatile.

I feel that the inflationary impact would continue to be seen as crude oil prices remain high, thus keeping a positive factor of inflation-hedge demand. While the Federal Reserve is expected to begin tapering of the stimulus, other major economies like Europe and Japan are likely to see a continuation of the stimulus. China too is expected to announce some measures in order to boost economic growth. Such liquidity and boosting actions by central bankers would create an inflationary scenario going forward and thus support demand for the yellow metal. The overall trend in the gold prices is expected to be bullish and the Indian market is likely to trade between 25700 on the lower side and 35200 on the higher side for the year ending 2014.

Progress of Indian Agriculture in 2013-14

The year 2012-13 has been a year of phenomenal growth for the Indian agriculture. As per the fourth advance estimates the total food grain production is likely to be 255.36 million MT. Wheat production for 2012-13 is estimated at a record 92.46 million MT and rice is expected to expected to reach 104.4 million MT. over the years Indian agriculture has come a long way on the upward growth cycle. Currently India ranks first in the production of milk, pulses, jute and jute-like fibers; second in rice, wheat, sugarcane, groundnut, vegetables, fruits and cotton production; and is a leading producer of spices and plantation crops as well as livestock, fisheries and poultry. The rapid growth of agriculture is essential not only for self-reliance but also for meeting the food and nutritional security of the people, to bring about equitable distribution of income and wealth in rural areas as well as to reduce poverty and improve the quality of life.

The performance of the Indian commodity market has been exceptional in the year 2012-13. India has improved its position in agricultural and food exports to 10th globally, backed by policy impetus by the government. Total exports of Indian agri and processed food products from April 2012 to March 2013 stood at Rs 11,633,168.41 lakh (US$ 17.26 billion) as compared to Rs 8,248,025.32 lakh (US$ 12.23 billion) during the same period last year. The especial contribution to the export basket was from the spices and processed food sector. India recorded an increase of 22 per cent in the export of spices and spice-based products during 2012-13 to touch 699,170 tonnes, as against 575,270 tonnes in the previous financial year. The Soymeal exports during June 2013 were 213,400 tonnes as compared to 180,900 tonnes in the same period of previous year registering an increase of 18 per cent.

Food security still remains a highly sensitive issue in many parts of the world, especially with India, which has to feed nearly a 1.2 billion population, and it is expected to see a return of government interventions, which could exacerbate food and commodity price volatility. The volatility of commodity prices has always been a major concern of the producers as well as the consumers in an agriculture dominated country like India. The movement in the prices is directly linked to the commodity fundamentals. Fundamentals, including unexpected changes in global economic conditions linked to the strong growth in demand of emerging market economies have played a key role in driving developments in commodity markets. Other factors that have also played a role are supply shortfalls and monetary policy, and in recent years, various ad hoc policy interventions. Price movements have also been exacerbated by various structural problems in the supply and distribution chains of different commodities.

An Interesting Fact about Gold........in India

Gold prices have been the barometer of the confidence of the investors since long. It has always been a safe haven for the investors. Gold prices are volatile whenever the global economy is fraught with uncertainties. The recent financial crisis of the European Union countries and the subsequent spike in the gold prices is a case in point. The prices in the futures have by far moved in tandem with the seasonality of the Spot market. The peaking of the price in the months between July and October or the dip in the prices towards the middle of the third quarter has been the normal pattern.

The details of Indian market analysis also reveal a more bullish outlook for the yellow metal.  As per an estimate about 18,000 tonnes of gold in India are held by households. Indian gold demand has grown 25 per cent despite a 400 per cent Rupee price rise in the last decade. Gold demand is strong and is expected to increase 30 per cent by 2020. By 2020, cumulative annual demand for gold in India will increase to in excess of 1,200 tonnes. India's rapid growth, which will have significant impact on income and savings, will lead to more gold being purchased by almost 3 per cent per annum over the next decade. Indian growth is expected to be around 10 per cent GDP in the next decade, which is sufficient to support the bulls in the investment world.

Gold and Silver outlook in 2014

How would demand and supply pan out in 2014.

Global mine production in the first half of 2013 increased by 41 MT or 3 per cent, to total 1,416 MT. Geographically, gains were diverse, with notable increases in China, the Dominican Republic, Canada and Russia. Global scrap supply fell by 14 per cent in the first half of 2013 to an estimated 662 MT chiefly as a result of weaker gold prices. Jewellery fabrication jumped by 22.8 per cent in the first half, in response to a marked decline in gold prices. Net official sector purchase has dropped by 32.0 per cent to 191 MT in the first half of 2013.

What would be the major triggers for gold prices in 2014?

Looking at the price trends in gold, prices started the down trend since August 2012. Gold’s ability to stage further price gains for the remainder of the year will largely depend on developments in the US and its labour market which, while still fragile, has shown improvements in recent months. Indeed, particularly since the Fed has tied its QE mandate towards developments in the unemployment rate, the FOMC meetings and the non-farm payroll releases have almost become price trend determining events. The other factors to be closely watched are festival periods for jewellery purchases (particularly in China and India), recent geopolitical tensions in Syria which could lead to a wider Middle East conflict and the proposed Fed tapering of EQ3 which would lead gold to another downside rally.

Tell us how volatile gold would be in 2014.

From the Indian perspective, gold has always been seen as a saviour in times of financial crisis and the pledge or sale of gold has helped investors reap benefits of investments made earlier. Hence, even though the commodity is under stress in the current scenario, the emotional value towards the metal that has been existent since centuries will not be shaken up completely. Although trends in demand patterns will change and the outlook of investors will evolve, the role of gold as an important investment asset will continue in the years to come. In the years 2011 and 2012 gold has again witnessed a decline in demand as sentiments towards the improvement in the US economy have become positive and additionally, investors are now seeking different investment avenues considering the fact that the nature of price drivers that affect gold prices has become very volatile.

What is the outlook for gold in 2014?

I feel that the inflationary impact would continue to be seen as crude oil prices remain high, thus keeping a positive factor of inflation-hedge demand. While the Federal Reserve is expected to begin tapering of the stimulus, other major economies like Europe and Japan are likely to see a continuation of the stimulus. China too is expected to announce some measures in order to boost economic growth. Such liquidity and boosting actions by central bankers would create an inflationary scenario going forward and thus support demand for the yellow metal. The overall trend in the gold prices is expected to be bullish and the Indian market is likely to trade between 25700 on the lower side and 35200 on the higher side for the year ending 2014.

How should one invest in gold in 2014?

Like other asset classes, a gold investment is associated with risks. The price of gold can fluctuate strongly in the short term and also in the long term. Over very long periods of time gold does show a high and – from our perspective – unique stability or wealth preservation. However, such periods can be too long for individual investors. On the other hand, for any risk averse investor an addition of gold contributes to the diversification of his/her investment portfolio. Due to the low correlation of gold with other asset classes, a gold investment reduces the (price) risk for the investor and therefore can reduce potential losses. Professional and courageous investors can speculate on a specific gold price development. For safety-oriented investors it is recommended – also in light of the lack of a regular income or interest from a gold investment a form of insurance. Unlike possibly individual stocks, bonds and other securities, gold will never lose its value completely. Conservative investors should invest only a portion of their total assets in gold.

How silver would perform in 2014.

In India the silver demand and imports into India fell 80 per cent in 2012. The fall in demand has a direct reflection on import, though India produces sizable silver, unlike gold where the country is totally import-dependent. In 2012, India's silver demand for investment was just 300 MT, against 1,549 MT in 2011. India's total demand for silver was 3,234 MT in 2012 against 4,437 MT in 2011. The import was 1,900 MT in 2012, against 4,087 MT in 2011. Silver prices peaked in April 2011, at a global $48.4 an ounce. In the global market, primary silver mine supply grew only slightly in 2012, by 1 per cent. Primary silver total cash costs rose by 9 per cent, to $8.88/oz, as credits from base metal by-product revenues fell, coupled with lower grades and higher input cost inflation. Total fabrication in 2012 dropped by 6.6 per cent to 846.8 Moz (26,339 MT), reflecting losses in all areas. Industrial fabrication fell the second year in a row, easing by 4.5 per cent to 465.9 Moz (14,490 MT), due mainly to patchy GDP growth and thrifting. Implied net investment surged by 21 per cent to a fresh all-time high of 160.0 Moz (4,976 MT). The overall trend in the silver prices is expected to be bullish and the Indian market is likely to trade between 41000 on the lower side and 64000 on the higher side for the year ending 2014.

Kharif crop estimates for 2013-14

Indian agriculture is always under increased pressure on account of consistent population growth (Annual 1.53 per cent) and its extensive reliability on monsoon rains. In the recent times the impact of global warming has increased the uncertainty in both time and amount of rains in the monsoon season.

As per ESSO-India Meteorological Department (IMD), the Southwest monsoon seasonal rainfall for the country as a whole is most likely to be Normal (96-104% of Long Period Average (LPA)) with the highest probability of 46%. However, the probability for the seasonal rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA) is relatively low (10% and 3% respectively). Based on studies, a negative phase of IOD predicted in the later part of monsoon, predicted by JAMSTEC, Japan. Majority of the models indicate that El Nino 3.4 SSTs will remain near neutral ENSO condition. Operational/experimental forecasts prepared by international institutes like the ECMWF (Europe), NCEP (USA) ECMWF, APCC (Korea), Sintex /Jamstec (Japan), CDAC (Centre for development of Advanced Computing), IRI Columbia University (USA), ITEC(Japan, MRI (JAPAN) and EUROSIP (Europe) have all predicted the monsoon to be 103% OF LPA  for the period between June and September 2013.

Amidst expectation of normal monsoon, the Indian kharif crop scenario is likely to improve significantly. The total kharif foodgrain production is likely to improve by 8.09 per cent over last year to 135.00 million tonnes. Rice is expected to show an increase in area by 3.99 per cent and an increase of 5.13 per cent in production over last year. Among the oilseed crops, the overall production is expected to increase by 20.63 per cent over last year, in which the groundnut production to expected to increase significantly by 86.71 per cent over last year. In this current monsoon season the only crop with negative acreage and production over last year is likely to be sugarcane whose area is expected to decline by 6.27 per cent and its production is likely to decline by 0.42 per cent.