Monsoon rains pick up, some concerns linger

A girl runs for cover as it rains as monsoon clouds gather over Meerwada village in Guna district in Madhya Pradesh June 19, 2012.

NEW DELHI/MUMBAI (Reuters) - India's crucial monsoon rainfall picked up from early lows last week, the weather office said, but concerns remain as it is still below average and the rains are behind schedule particularly in the grain bowl of the north-west.

India, one of the world's biggest producers and consumers of wheat, rice and sugar, relies heavily on the monsoon as about 55 percent of its arable land is rain-fed, and farming contributes about 15 percent to the near $2-trillion economy.

Rains were five percent below average in the week to June 20, the weather office said on Thursday, gathering momentum after coming in 36 percent and 50 percent below average in the first and second week of the monsoon respectively.

A delayed start is not unusual and the key to avoiding drought really lies in distribution of the rains over key crop producing areas during July and August -- the heaviest rainfall months.

But farmers need rain to moisten the land for sowing and a lack of rain can push that work back and consequently harvesting.

The June-September rains arrived over the southern Kerala coast four days behind the usual start date of June 1 and so far have covered more than half of India.

The rains have been 26 percent below average so far since the beginning of the season, delaying sowing of summer-sown crops like paddy, sugar cane, soybean and cotton in central and southern India.

Rains are yet to arrive over rice, oilseeds and cotton areas of northern states such as Punjab, Haryana and Uttar Pradesh, and also in soybean areas of central India. But monsoon rains have spread so far to rice, corn and cane areas of south and eastern India.

"We are running behind the expected level of monsoon rains," said Harish Galipalli, head of commodities research at JRG Wealth Management.

"There is still time to cover it up, but further delay may lead to a drought-like situation. The next two weeks are very crucial."

The July soybean contract on India's National Commodity and Derivatives Exchange erased early losses to end higher on the shortage of rains in Madhya Pradesh, top soybean producer.

"Overall monsoon progress is slightly behind schedule but such delays are usual," L.S. Rathore, director-general of the India Meteorological Department (IMD), told journalists, adding there was no cause for concern yet.

Progress of monsoon in India link.reuters.com/fep88s

Indian monsoon and key summer food crops link.reuters.com/nez58s

Indian monsoon - actual vs official forecasts link.reuters.com/far67s

"If the monsoon progress was delayed by more than a week, then it would have been a cause of concern," Rathore said, implying the rains would increase their spread shortly into areas which usually have received them by now.

The weather office had forecast an average level of monsoon rainfall in 2012 before the start of the season in April and is likely to give its second official forecast on Friday, Rathore said.

Some weather experts suggest it could now be revised to slightly below average, as happened in 2011, a year which produced record grain harvests and sugar surpluses.

Rainfall between 96-104 percent of a 50-year average of 89 centimetres is considered normal. The last time there was a drought when rains were below this range was 2009 and before that, in 2004.

The world's second biggest producer of cotton, sugar, wheat and rice relies on monsoon rains to feed its 1.2 billion people and any shortfall can stoke already high food inflation which is holding back the central bank from interest rate cuts.

(Editing by Jo Winterbottom and Keiron Henderson)