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

As we are approaching June, Weather Trends has turned our attention regarding agricultural commodity research towards the outlook for this year’s monsoon season in India.  In 2009, the lack of seasonal rains resulted in poor growing conditions for many Indian farmers, which resulted in supply shortages and rapid price spikes across the agricultural spectrum.  Most notable from ‘09 was the story which came from the Indian sugar market.  India is the worlds second largest producer of sugar, following Brazil; despite this strength in production, strong internal demand for the sweetener used to mean that India usually still required imports to satisfy their domestic requirements.  However, the last few years had seen a shift, and with a concerted expansion of acreage, India became a net exporter, which is a significant position concerning the global balance of physical supply.  

Enter 2009: as of May of last year, the Indian Meteorological Department, which is the only source of weather information for many across the subcontinent (and elsewhere), was forecasting a normal rainy season during the monsoon period.  Relying on one source of weather information for a forecast that carries such a significant financial risk, can be dangerous, and last year’s pattern eventually underscored this point.  The 2009 monsoon never got off to a good start, and conditions did not improve, particularly for sugarcane growers, until harvest approached.  So instead of a healthy monsoon producing 23-24 mmt of sugar, the crop came in somewhere between 16 and 18 mmt (depending on the source) and sugar futures reacted accordingly in a year where there was already a well documented global supply deficit.  The world futures market saw the sugar contract rise from below 16 cents (per lb) to the 30 cent range within a three month time span.  Prices have since retreated down to previous levels (current spot sugar below 15 cents/#), but the global supply shortfall still exists, so the coming monsoon season is extremely important if growers are to return to a position where India returns to net export status in the coming crop year.
 
Fortunately, not only for sugar growers but for all Indian agricultural producers along with the ancillary supporting industry sectors, we are forecasting a better start to the Indian Monsoon season in 2010.  We stress that the onset period is critical for healthy agricultural production, and the Weather Trends long range forecast combined with analysis of various climatological indices, primarily warmer northern Indian Ocean temperatures, have formed our view to support a better beginning to the season. The maps on the coming pages highlight the WTI outlook for the monthly rainfall pattern from June through September.  

JUNE 2010
The map below depicts the WTI forecast for total precipitation in June. With a strong start to Monsoon convection developing in the south, this is a very favorable pattern for growers in the Karnataka/Tamil Nadu region. Even parts of eastern Rajasthan should expect a better June than last year. The inset map to the right shows the projected year-over-year change in the pattern, which clearly highlights a better start to the season in 2010.

 

 

JULY 2010

Total rainfall in July still looks to be healthy, but readers should note that there is a reason that we have been stating to clients that the start of the monsoon should be favorable, but we have not been calling this year a complete recovery over 2009. The pattern in the south is still expected to remain strong, but there are regions in central India where the totals are not reflecting an active pattern. Remember that while the current El Nino is certainly weakening, we are still in the El Nino pattern, which does have moderate negative correlation with monsoon behavior.

 

AUGUST 2010

Again, in August, WTI is anticipating an active pattern, with a particular benefit to the northwestern regions, but areas to the east, while still receiving adequate monthly totals, should not expect a dramatic increase over the prior year. Regarding sugarcane, the northeastern growing belt which spans across much of Uttar Pradesh and Bihar do have susceptibility for drier conditions, which could have negative impact on sugar tonnage and agricultural yields.

 

SEPTEMBER 2010

The monsoon will start to retreat from Rajasthan in September, but a fairly active pattern will persist, helping with a final push before harvest (groundnuts/oilseeds). A drier pattern in the south will be more conducive to stronger final yields, provided adequate tonnage is secured through the pattern that we are expecting in the prior months.

 

 

 

SUMMARY

As noted on page 3, the current El Nino is fading but still present, and there can be a lag before a return to a neutral precipitation pattern. While there are arguments both for and against the causal factors when analyzing El Nino years and monsoon strength, there does seem to be a relationship when we examine similar years.

Entering the 2010 onset period, Sea Surface Temperatures surrounding the subcontinent are warm, as seen in the map above; this should help the monsoon get off to a healthy start. As we move through the season, while we are looking for a better overall year than last year, we do note that there are still periods where certain geographic regions may be deficient in moisture, and the risk has therefore been highlighted. At this stage, we are expecting a year-over-year improvement, but we are not going to state that the coming monsoon will be favorable for the entire season, as we are concerned with the potential for some deficiencies which are in the forecast for the mid/late season pattern.