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Economy
Monsoon
Monsoon slows down, as expected. Rainfall data till July 16 indicate that weekly
precipitation has indeed slowed down from the strong start in June. On a cumulative
basis till July 16, India was 3% below the Long Period Average (LPA) rainfall; down from
11% above LPA till June 30. The IMD in its month-end report in June had indicated that
the first half of July was likely to be disappointing and chances of a pick-up are likely in
the second half. Sowing has also slowed down with acreage of pulses and oilseed lower
than the same period last year. Fourth advance estimates for FY2011 indicate that crop
production has reached record levels after a weak FY2010 output.
Rainfall till July 16 at 3% below LPA; 7 subdivisions classified as deficient/scanty
Out of the 36 sub-divisions in India, 7 are in the deficient/scanty zone and 5 in the excess rainfall
zone with remaining classified as normal (see Exhibit 1). At the time of our last update till June 30,
16 subdivisions were in the excess category, with the remaining equally spilt between
deficient/scanty and normal zone. In the first two weeks of July, precipitation across the country
was down below LPA by almost 25% and 19%. With both spatial and temporal distribution of
rainfall, especially in July, important for the sowing pattern, the acreage is likely to be hampered.
Gujarat, the main cotton producing state, continues to be the ‘driest’ state in the country. The
northern and eastern parts of the country have seen good rainfall with most of the regions staying
above the LPA. This is likely to bode well for paddy and sugarcane production. On a historical
basis, rainfall in June is around 137 mm, July around 253 mm, August around 244 mm and
September around 171 mm. In comparison, rainfall this year in June has been 170 mm and till
mid-July it has been around 100 mm.
Sowing data disappointing; FY2011 fourth advance estimates show record output of most crops
Sowing data for pulses and oilseeds have been lower for the monsoon season till July 8.
Comparing with FY2011 for the same period, we can see only paddy showing some promising
acreage with current acreage up by 0.6 mn hectares from last year. Total pulses acreage is down
by 0.7 mn hectares from last year. Maharashtra, which is one of the most important producers of
pulses, has seen rainfall ranging from deficient to normal across the region. In cash crops, cotton
acreage has been low as expected with Gujarat seeing deficient rains. Overall, crop acreage is
lower by around 2 mn hectares from last year (see Exhibit 2).
On the other hand, fourth advance estimates of crop production for FY2011 indicate that majority
of the crops had registered record production. Foodgrains at 241 mn tons were the highest ever
with wheat, pulses and coarse cereals production at record highs (see Exhibit 3). In FY2012E, we
expect agriculture and allied sector to grow at 4.5%, after a strong 6.6% growth in FY2011.
However, key to this would be a turnaround in the rains, especially in July, so as to bring about an
improvement in the acreage and consequently production.
Reservoir and basin surplus levels moderate from June levels
With the slowing down of monsoon in the first half of July, the reservoir and basin levels
compared to the last 10-year average have moderated, though still remaining in surplus. At the
end of June, Mahi and Sabarmati river basins were deficient, but now 3 other river basins have
also moved into the deficient zone (see Exhibit 4). Aggregated water levels in the 81 main
reservoirs in the country indicate that the reservoir surplus has now moderated to about 25% from
80% at end-June (see Exhibit 5). While these levels may not be of immediate help, these are
important for the rabi season and for alleviating drinking water shortages across the country. At
the end of last year’s monsoon season, reservoir levels were deficient by 12.5% and river basin
levels were deficient by 19.2%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Economy
Monsoon
Monsoon slows down, as expected. Rainfall data till July 16 indicate that weekly
precipitation has indeed slowed down from the strong start in June. On a cumulative
basis till July 16, India was 3% below the Long Period Average (LPA) rainfall; down from
11% above LPA till June 30. The IMD in its month-end report in June had indicated that
the first half of July was likely to be disappointing and chances of a pick-up are likely in
the second half. Sowing has also slowed down with acreage of pulses and oilseed lower
than the same period last year. Fourth advance estimates for FY2011 indicate that crop
production has reached record levels after a weak FY2010 output.
Rainfall till July 16 at 3% below LPA; 7 subdivisions classified as deficient/scanty
Out of the 36 sub-divisions in India, 7 are in the deficient/scanty zone and 5 in the excess rainfall
zone with remaining classified as normal (see Exhibit 1). At the time of our last update till June 30,
16 subdivisions were in the excess category, with the remaining equally spilt between
deficient/scanty and normal zone. In the first two weeks of July, precipitation across the country
was down below LPA by almost 25% and 19%. With both spatial and temporal distribution of
rainfall, especially in July, important for the sowing pattern, the acreage is likely to be hampered.
Gujarat, the main cotton producing state, continues to be the ‘driest’ state in the country. The
northern and eastern parts of the country have seen good rainfall with most of the regions staying
above the LPA. This is likely to bode well for paddy and sugarcane production. On a historical
basis, rainfall in June is around 137 mm, July around 253 mm, August around 244 mm and
September around 171 mm. In comparison, rainfall this year in June has been 170 mm and till
mid-July it has been around 100 mm.
Sowing data disappointing; FY2011 fourth advance estimates show record output of most crops
Sowing data for pulses and oilseeds have been lower for the monsoon season till July 8.
Comparing with FY2011 for the same period, we can see only paddy showing some promising
acreage with current acreage up by 0.6 mn hectares from last year. Total pulses acreage is down
by 0.7 mn hectares from last year. Maharashtra, which is one of the most important producers of
pulses, has seen rainfall ranging from deficient to normal across the region. In cash crops, cotton
acreage has been low as expected with Gujarat seeing deficient rains. Overall, crop acreage is
lower by around 2 mn hectares from last year (see Exhibit 2).
On the other hand, fourth advance estimates of crop production for FY2011 indicate that majority
of the crops had registered record production. Foodgrains at 241 mn tons were the highest ever
with wheat, pulses and coarse cereals production at record highs (see Exhibit 3). In FY2012E, we
expect agriculture and allied sector to grow at 4.5%, after a strong 6.6% growth in FY2011.
However, key to this would be a turnaround in the rains, especially in July, so as to bring about an
improvement in the acreage and consequently production.
Reservoir and basin surplus levels moderate from June levels
With the slowing down of monsoon in the first half of July, the reservoir and basin levels
compared to the last 10-year average have moderated, though still remaining in surplus. At the
end of June, Mahi and Sabarmati river basins were deficient, but now 3 other river basins have
also moved into the deficient zone (see Exhibit 4). Aggregated water levels in the 81 main
reservoirs in the country indicate that the reservoir surplus has now moderated to about 25% from
80% at end-June (see Exhibit 5). While these levels may not be of immediate help, these are
important for the rabi season and for alleviating drinking water shortages across the country. At
the end of last year’s monsoon season, reservoir levels were deficient by 12.5% and river basin
levels were deficient by 19.2%.
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