Aug. 6 (Bloomberg) -- India’s monsoon, the main source of irrigation for the nation’s 235 million farmers, was less than average for a second week, threatening harvests of crops such as sugar cane and rice.
The country received 23.5 millimeters of rain, 64 percent below the average 65.9 millimeters in the week ended Aug. 5, the India Meteorological Department said on its Web site. Falls were deficient or scanty in 27 of 36 weather divisions. The deficit in June 1-Aug. 5 period widened to 25 percent from 19 percent a week earlier, the office said.
A normal monsoon is key to Prime Minister Manmohan Singh’s efforts to push economic expansion back to a 9 percent pace and cool prices of essential commodities such as sugar and lentils. Dry weather in July last year hurt sugar cane output this year, turning India into a net importer for the first time since 2006.
“Insufficient rain has hurt cane crop in Uttar Pradesh,” Farm Minister Sharad Pawar told the parliament today. “We need to keep a close eye on the monsoon situation.”
Raw Sugar reached a 28-year high in New York today on speculation a deficient monsoon rainfall in India will limit cane yields and prolong a global deficit. Futures for October delivery rose 2 percent to 19.76 cents a pound at 8:44 a.m. on ICE Futures U.S. in New York. Earlier, the price reached 19.83 cents, the highest for a most-active contract since April 1981.
White sugar traded in London reached the highest since 1983 and prices in Vashi, India’s biggest wholesale market reached a record today.
Uttar Pradesh, India’s second-biggest sugar producer, has declared drought in 47 districts. Maharashtra state, the biggest producer, cut its output forecast for next year to 4.6 million tons from 5 million predicted in June.
Switching Acreage
Output may drop 43 percent to 15 million tons in the season to Sept. 30 from 26.4 million tons a year earlier after farmers switched to more profitable crops such as wheat, Pawar said.
“The overall price situation including pulses and sugar is very serious,” Pawar said. “We have taken several steps to control open market prices by making imports free.”
India has contracted to buy 2.9 million tons of raw sugar, of which 1.84 million tons has arrived into the country or is in transit, Pawar said. Purchases in the year starting Oct. 1 may soar to 8 million tons, Arhant Jain, the executive president of finance at Dhampur Sugar Mills Ltd., India’s No.4 producer, said yesterday. The projection is double the import volume estimated by the country’s biggest producers.
Monsoon in the June-September season will be 93 percent of the long-period average of 89 centimeters (35 inches), with a margin of error of 4 percent, the government forecast June 24, scaling down an April forecast for normal monsoon.
“If the rains in August and September turn out to be normal, then price situation may improve,” Pawar said.
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