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

The chart below shows how the Weather Trends long range Indian rainfall forecast is verifying so far this summer (bars: y/y change in weekly totals; line: observation).  Over the last three months, the last week is the only week that we missed – looking ahead a few more weeks, we are looking at a reduction in y/y totals again once we get into mid-August.  What is more important is that while the total weekly precipitation numbers may appear adequate for agricultural producers of grains/oilseeds/groundnuts/soft commodities, the distribution so far this season has clearly benefited southern India, as sugarcane regions in the north are still waiting for a consistent pattern of healthy weekly totals to help the crop.  The current rains across all of India are putting some downside pressure on the market (as expected), easing the fears that extended dryness will have a production impact on the developing cane crop.  However, this should be a short-lived benefit as the pattern that has been dominant so far this season (wet south/dry/north) resumes in a couple weeks – this, coupled with distribution problems at Brazilian ports, will extend market support.

As such, we advise buying on dips (like today) as longer range support is still for a constructive market for OCT futures.