Commodities Research | India Key Rabi Crops Outlook for and Inflation

Impact of weak/deficient monsoon and post monsoonal rainfall on Rabi output 2 Source: IMD, Ministry of Agriculture

3 Post monsoon rainfall distribution in 2015: Source: IMD During Oct 2015, after initial improvement, post monsoonal rains remained weak. Rainfall was 47.10% lower than normal. Central and Northern states have remained dry through most part of Oct-Dec 2015

3 Temperature distribution from Sept-Dec 2015 Deficient monsoon and post monsoonal rainfall have contributed to decline in soil moisture. Above normal temperatures during Oct-Dec too have added to moisture distress. According to IMD, the period between Sept –Dec 2015 was the hottest since The mean temperature in December 2015 was 1.20 degrees Celsius, highest ever recorded for the month. There was a brief respite from above normal temps during mid-Dec, but that has not added to any improvement in crop status.

5 Crop Health Status Water Reservoir Status

6 Water Reservoir Status As of Dec 31, 2015 water stock in 91 major reservoirs was at BCM. Current storage is lower than the last year’s position of BCM and the average of last 10 year’s storage of BCM. – Source: CWC

7 Key Rabi Crops Production Scenario Sources: Govt of India, Phillip Commodities, Trade Estimates The driest and most stressed crops seem to be located in central Maharashtra and central Madhya Pradesh to southern Uttar Pradesh, Rajasthan, in a few Bihar and West Bengal locations and northern Telangana. Central and northern regions weather adversity will impact wheat this Rabi season. Highly concentrated pulse production region being in northeastern Madhya Pradesh and neighboring Uttar Pradesh - an area that the Vegetative Health Index suggests is most stressed by dryness. India would suffer most from the combination ongoing dryness in the next few weeks and very warm to hot temperatures during reproduction. Hot weather during reproduction would hurt India’s crops more than any other event.

8 According to our consultants World Weather Inc., There will be some improvement in the successes rate for weather events to reach into India’s winter crop areas during the latter part of this month and in February. Confidence is not high, but there is a fair chance that timely relief may still occur prior to and during reproduction. However, the most important part of the forecast is the lack of heat during reproduction and that will help irrigated crops perform relatively well. Weather Forecasts

9 Key Rabi crops and Inflation Key rabi crops such as wheat, has a weight of 5.8% in the CPI while pulses have a weight of 2.65% and edible oils 3.9%. Food has a large weight of 50% in CPI and 20% in WPI. Deficient monsoon and fall in kharif agricultural output has been reflected in a rebound in WPI & CPI since July. This trend might very well continue, in the event there is no relief for rabi crops from weather in Jan and Feb. If rabi production losses remain large it could support higher inflation expectations.

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