Newly harvested paddy has started arriving in the markets of Punjab and Haryana while late rains have helped boost the area under the crop to more than last year's levels, developments that bode well for the supplies of the staple grain and food inflation.

Scanty rains in the first half of the June-September monsoon season had threatened to hurt this year's farm output, which is critical to the overall economy in a country where more than half the workforce is employed in agriculture. But rains had picked up in the second half, and though still this season's average rainfall is 12% below what is considered normal, water levels in reservoirs are better than their 10-year average. Late rains are likely to help keep soil moisture longer, benefiting winter crops such as wheat.

According to agriculture ministry data, total crop plantings at 101.93 million hectares for the week ended September 26 were still 2% below last year's level. Rice plantings at 37.48 million hectares were more than last season's 37.42 million hectares, but areas under coarse cereals, oilseeds, pulses and sugarcane were less.

Early-sown basmati and other rice varieties have started reaching mandis in the two northern grain-bowl states, ahead of the procurement season that begins on October 1. Farmers have also started harvesting other summer crops of cotton, soyabean and pulses.

Regional basmati exporters have already entered the market and are buying the 1509 basmati variety at Rs 2,450 a tonnes, said Raj Sood, a trader from the Khanna mandi in Punjab.

According to officials at Food Corporation of India, the government's grain procurement agency, it estimates to procure 30.05 million tonnes of rice this year. Of this, it is expected to buy 8.2 million tonnes from Punjab, 4.35 million tonnes from Chhattisgarh and 4.1 million tonnes from Uttar Pradesh. As of September 1, the country had adequate stock of 21.7 million tonnes of rice in its buffer and strategic reserve.

Exporters are, however, concerned that with the discontinuation of a 3% interest subvention scheme, they will not be able to export the same quantity as they shipped last time. Gurnam Arora, joint managing director of Kohinoor Foods, said global prices were weak and an incentive was necessary for the industry.

Cotton prices could weaken as arrivals begin across Gujarat, Maharashtra, Punjab, Haryana and Rajasthan mandis. North India-based millers and ginners are buying cotton at Rs 33,000 per candy of 356 kg. India is the world's second-largest producer, behind China. Indian farmers have planted cotton on 12.66 million hectares this year, an 11% increase over last year.

International prices are less than local rates. "Multinational merchants Louis Dreyfus, Glencore, Reinherdt and Ecom are away from the market, expecting prices to be at international level of Rs 30,500-31,000 per candy," said Rakesh Rathi, owner of trading and ginning company KCT Associates at Abohar, Punjab.

Traders said with China unlikely to buy huge quantities, they have to look at alternative markets. "Bangladesh, Pakistan, Vietnam and Far East countries from Taiwan to Indonesia will be the new markets for India cotton," said Dhiren Sheth, president of the Cotton Association of India.

Data from the India Meteorological Department showed that two-thirds of the country's 36 sub-divisions received normal to excess rainfall this monsoon season. The country's major 85 reservoirs were filled to 79% of their total capacity of 155.05 billion cubic metres, down from 85% last year, but better than the 10-year average of 76%.

Himachal Pradesh, Gujarat, Punjab, Rajasthan, West Bengal, Tripura, Uttarakhand, Madhya Pradesh, Andhra Pradesh, Kerala and Tamil Nadu have less water in the their reservoirs than last year, the Central Water Commission said. The rainfall deficit has been worst in Haryana and west Uttar Pradesh at 56%,                                                                                                     .  

Source:- economictimes.indiatimes.com