Author: Michael Ferrari, PhD
VP, Applied Technology & Research

As noted in our posts over the last year, Weather Trends has been solicited by an increasing number of end users to provide our seasonal forecast for the Indian Monsoon, following the successful forecast which was developed in 2009.  Remember in 2009, when most of the agricultural community was anticipating a normal Monsoon pattern, a suboptimal season developed and contributed to market volatility in sugar among other raw materials.  Unlike may other providers in the weather space, Weather Trends is very transparent regarding our forecast; refer to the abbreviated 2010 Monsoon outlook which was issued publicly in May 2010 (earlier to WTI clients).  Now that the 2010 season is over, the Indian Met Dept published their post-season report, and we can see that the WTI forecast, which is a crucial forecast for the agricultural community, did verify once again.

The outlook called for a better start to the Monsoon in nearly all sub-regions, and as the forecast was developed primarily for understanding the impact of the pattern on sugarcane growing conditions, we noted the better start to the 2010 season in both northern and southern growing belts.  In spite of the poor overall year in 2009, our 2010 outlook increased expectations but clearly highlighted the likelihood for a better pattern to emerge in southern India, while noting the risk to the northeastern states of Uttar Pradesh and Bihar where the potential for drier conditions may limit crop potential.  During the mid-crop period, there was very little talk in the market on the northern states’ susceptibility to the dryness, and we are only now starting to hear more concern as global crop estimates for the 2010/11 crop are starting to come in lower. 

With the raw sugar market now trading close to 30 cents (Mar10), those who were able to lock in prices when they were in the 16 – 18 cent range, are likely in a very good position approaching the end of the calendar year.