According to a report, agri-commodity prices are unlikely to be affected even though there is lower rainfall because of El-Nino impacting production.
The report from the National Collateral Management Services (NCML) said that lower agricultural output in El-Nino years concerns the supply demand equation of many agricultural commodities and also leads to higher prices.
The monsoon period, in which the country gets more than 70 % of its annual rainfall, will begin in a couple of months and is projected to be affected by the El Nino this year.
El Nino & agri output
It is important to mention that El Nino is a climate rotation in the Pacific Ocean with a global impact on weather patterns.
During the El-Nino, there is usually below-normal precipitation leading to a fall in food production in the country. NCML Managing Director & CEO Sanjay Kaul said, “Despite lower production, prices of agri-commodities might not be affected due to huge buffer stocks with the government”.
He added that the government’s initiatives of maintaining buffer stocks of rice, wheat and pulses could hold aggressive gains in prices of these commodities.
But as India is one of the leading importer of edible oils in the world and with lower yield of oil seeds likely in 2019, it would witness an increased dependency on import of edible oils, according to the report.
