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

As we have been discussing each week, the trend of favorable rains in the south but deficient rains in northern India continues.  The weekly update from the Indian Met Dept is shown below which shows seasonal rainfall totals through August 18.  The weighted total slipped slightly to -5% vs. normal (not an issue), but the northern states again failed to make up for their shortfall.  At this stage, even if the pattern reversed and northern India started to receive abundant rains through October, there has been enough of a rainfall deficit thus far to affect yields, and as we have stated before, the coming crop year may be shorter than most current expectations.  Brazil’s healthy crop notwithstanding, this will likely start to affect prices on 3rd/4th futures in the coming months. 

 

The USDA (FAS) map below shows surface soil moisture as derived from satellite for the eastern Gangetic Plain region in U.P.; the index highlights  that soil moisture is generally where it was this time last year, and we remember that last year was far from optimal, particularly for the region’s sugarcane, groundnut and wheat crops.

As noted above, while there is still time for a partial recovery, the current pattern is not favorable and the widespread projections among analysts for a healthy producing season, particularly for the key producing areas of Uttar Pradesh, are likely too high.  Most of the consensus around India’s sugar production for the 2010/11 sugar year (Oct/Sep) is centered around a number of 24-25 mmt, with some industry estimates as low as 23 mmt, and others as high as 28 mmt. The Weather Trends outlook for India’s 2010/11 crop has been in the 22.5-23 mmt range (with some additional downside risk) and unlike most official estimates, this outlook has not changed over the last several months.  This estimate has figured in higher total India year-over-year production, with the positive factor coming from the southern growing regions; however, the outlook figures in dryness problems in the north, which are materializing, and the view looking ahead is not as optimistic as most in the industry.