Indian essential commodity prices soar on scanty rains

By Rajendra Jadhav

MUMBAI (Reuters) - Prices of essential commodities are soaring in the Indian spot and futures market as deficient rains in half the country delayed sowing, spurring fears of lower production, analysts and industry officials said.

India's annual monsoon rains, crucial to its economy, covered the entire country five days earlier than normal, but some places received excess rains, creating floods, while others got scant showers, creating a drought-like situation.

The benchmark agri futures index on the National Commodity and Derivatives Exchange (NCDEX) hit a record 2,237.95 points on Tuesday afternoon while spot prices of pulses, fruits and vegetables have risen about 10 percent in the last fortnight.

"July is a crucial month (for crops) and absence of rains at this time will affect production," said Harish Galipelli, head of research, Karvy Comtrade Ltd.

"Fears of lower production are leading to speculative buying in the market," he added.

The states of Maharashtra and Gujarat in the west and the southern part of the country received less rainfall between June 1 and July 9, the weather department data showed.

Essential commodities such as pulses, fruits, vegetables, oilseeds, sugar, cotton, cereals and spices are produced mainly in states which received deficient rainfall this year.

Their prices will remain on the higher side for next few weeks and may move up further if rains fail in the next fortnight, Gallipeli said.