As rainfall in the first half of the key crop planting month has been 13% higher than the average, traders are now betting on lower prices of edible oils, pulses and spices, bringing good news for the common man.The surge in monsoon rain recently has triggered a sell-off and lower prices for futures contracts in NCDEX, the country's premier exchange for agricultural commodities.
This was not the trend earlier as in the beginning of the month, the
Economic Times reported expectations of low farm output and consequent rise in inflation reflect in bullish bets in the market, while prospects of a good harvest after adequate rain lead to fall, which the market saw on Monday. Experts say prices can swing sharply in the months ahead.
Also, price movements will depend on the progress of the monsoon. The wholesale price of chana for delivery on July 20 was Rs 44.88 a kg on Monday, down 8% this month. In the same period, coriander dropped 9%, Jeera 11.35%, chilli 6.9%, sugar 5.2%, mustard 4.2% and wheat 1.5%.
"The markets, which earlier this month tried to form an upper band of prices (when fears of rain shortfall loomed) is now trying to create a lower band for prices," Viral Shah, senior Vice-President, Geofin Comtrade, told ET.
"From pulses to oilseeds and spices to food grains, everything fell on Monday after the IMD report on monsoon. The futures market indicated that the wholesale spot price had fallen between 1.5% and 11% for all these commodities from June 1,” he added.
However, the financial daily reported that experts warned of volatility in prices as stockists and traders, both in spot and futures markets, act based on the weekly reports of monsoon progress by IMD every Thursday.
(Image: Indiatimes)