NEW DELHI (Reuters) - India’s vital monsoon this year is expected to be just below normal, the weather office said in a revised forecast on Tuesday, but the rains could pick up after July 15, during the key planting month for rice, sugar cane and corn.
India’s Meteorological Department said in a statement this year’s monsoon rains would be 95 percent of the long-term average overall, down from its April forecast of 98 percent and just short of the 96-104 percent range which counts as normal monsoon.
India, one of the world’s largest producers and consumers of crops such as rice, sugar and corn, relies heavily on the June to September monsoon for agricultural output.
It had the driest monsoon season in over three decades in 2009 when rains were 23 percent below normal, which pushed it onto international markets to buy sugar, triggering prices to soar to record highs.
Eastern rice-growing regions have received the least rain so far but the country’s rice stocks are already overflowing after a bumper harvest last year.
A normal monsoon this year could have encouraged the government to free up stocks in rice, sugar cane and cotton for exports, and helped boost consumer demand in the countryside to push economic growth in Asia’s third-largest economy.
Government officials played down concerns lower rainfall could fan inflation and dampen growth.
“There is no need to press the panic button, as June rains are still above normal,” said Shailesh Nayak, the top civil servant in the ministry of earth sciences which controls the country’s weather office.
While rains could be slightly lower than normal in July, India’s chief forecaster said distribution was key.
“There are chances the monsoon will pick up after July 15 once it covers the entire country,” said D. Sivananda Pai, director at the state-run National Climate Center.
“Don’t go by the numbers, it is the distribution (of the rains) which we are still hoping to be good.”
The weather office predicted 27 centimetres of rain in July compared with long-term average rainfall of 29 centimetres, and rains at 24 centimetres in August, when seeds start maturing, compared with long-term averages of 26 centimetres.
India’s weather office issues two forecasts for the annual monsoon and Tuesday’s revised estimate is the final one for this year although there will be weekly updates on rainfall throughout the season.
Technological wizardry may have improved forecasting of the monsoon, but success still remains, at best, patchy, making it tough for farmers to plan crops and meet demand in the trillion-dollar economy.
Since 1994, India’s weather office has only managed to forecast the June-September monsoon outcome correctly five times, discounting an error band of +/-5 percent, Deutsche Bank analysts said in a research report this year.
“Our forecast (since May) has been 96 percent. We are glad that the Indian weather office has corrected their forecast,” Drew Lerner, senior agri-meteorologist of the U.S.-based World Weather Inc told Reuters.
Poor rainfall can trigger demand from farmers for higher rates for produce and waiver of loan repayment and electricity charges, hitting public finances. Lower farm output could add inflationary pressure on the economy.
This would only compound concerns of Prime Minister Manmohan Singh, whose government is struggling to tackle a slowing economy along side criticism over its handling of a spate of corruption scandals and inability to push reforms.
Wholesale inflation currently stands at 9 percent, roughly double the comfort level of the Reserve Bank of India, which has raised rates for the 10th time in just over a year on June 16.
Lower rainfall also crimps hydroelectric output and increases demand for diesel, whose subsidised prices are already inflating the government’s spending.
Soybean and guar seed futures on India’s National Commodity and Derivatives Exchange (NCDEX) extended gains after the forecast on concerns of lower output.
The most-active soybean for July delivery on NCDEX provisionally closed near the day’s high at 2,303 rupees per 100 kg, up 1.28 percent. Guar seed for July also rose by more than a percent to close at 3,372 rupees per 100 kg.
“Insufficient soil moisture could delay sowing and affect the crop growth in kharif (summer-sown) season,” said Vimla Reddy, an analyst with Karvy Comtrade in Hyderabad.
Weather office chief Ajit Tyagi remained optimistic.
“Ninety five percent is a good forecast,” Tyagi said.
“Had it been 90 percent of the long-term average then it would have been a cause for concern,” he said, adding that in the past slightly below normal monsoon rains had also seen adequate farm output because they were well distributed in the major crop growing regions.
The latest monsoon data showed rains in the June 1-21 period were 11 percent above average with a well distributed monsoon in the west, south and central regions but slightly deficient in the rice-growing eastern parts.
West Bengal and Orissa account for about a fifth of the country’s rice output. Farmers grow cotton, sugar cane and groundnut in the west, soybean in central regions and corn and rice in southern India.
India’s rice stocks stood at 27.64 million tonnes against a target of 17.1 million tonnes as on June 1. The farm ministry in February forecast 2010/11 rice output at 94.11 million tonnes against 89.09 million tonnes in the previous year.
Additional reporting by Siddesh Mayenkar and Meenakshi Sharma in MUMBAI; Writing by Krittivas Mukherjee; Editing by Jo Winterbottom