The harvesting stage of 2018-19 kharif crops is fast approaching and weather conditions are favourable to harvest early sown crops. The southwest monsoon has been near normal in all three months in major agricultural belts, except Saurashtra in Gujarat and west Rajasthan, which were largely deficient.
The southwest monsoon is about to retreat with some delay. Late rains will prove beneficial for kharif yield but favours rabi sowing. Nevertheless, optimistic crop prospects pressurised prices of many agricultural commodities, but festival demand and a weaker rupee versus the dollar were some of the few factors that contained losses.
Turmeric and mentha oil were among the major losers, down almost 4.5 percent, followed by the guar complex declining around 2 percent. Good rains in turmeric-growing belts of southern India piled pressure on this spice, while the fall in guar is on expected lines and late rains might help recoup losses to some extent. Oilseeds and the edible oil complex were among the top gainers last week, due to a weaker dollar-rupee, festival demand and fewer stocks.
This week will be yet another volatile week for oilseeds and the edible oil complex. Soybean stocks in the pipeline are lower, but new crop arrivals will soon commence. The crop condition is so far good and spells of rain could boost yields.
Thus, prices might decline next week, provided the weather is conducive to harvesting. Traders are uncertain about the procurement process to be adopted by state governments. A decision in this regard is awaited.
On the contrary, the domestic edible oil complex is expected to recover in coming weeks. Global edible oil markets though are under pressure due to huge stockpiles and seasonal-supply pressures, while a weak dollar-rupee makes imports expensive for domestic markets.
The focus of the week would be the Malaysian Palm Oil Board data on stockpiles, production and exports, and United States Department of Agriculture’s monthly demand-supply report to be released on Wednesday. The expected rise in Malaysian palm oil production and inventory may bring about a fall in prices of crude palm oil in domestic markets.
Prices, though, will bounce back considering costlier imports and the approaching festival-season demand.