Monsoon, so far, has been much below par even as it has picked up somewhat in July. Sowing in all key kharif crops is below normal, pointing to weak output, going forward. From inflation perspective, oilseeds are emerging as a key risk area because of lower domestic sowing and rising international prices. Pulses, too, are at risk because of poor sowing season so far. Among other food grains, rice sowing is relatively lower, but record-high stock in government granaries mitigates risk. With regards to cash crops, cotton sowing has been close to normal so far and FY12 has seen a record production. However, rainfall has to pick up, particularly in Gujarat, for a decent yield.
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Overall, there are increased risks of lower kharif output and rise in agri-prices, particularly in oilseeds and pulses. If rainfall situation improves in the coming days, it could mitigate some risks.
Regards,
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