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Higher MSPs ensure better returns to farmers and increases crop area under cultivation

The kharif-crop delay and output loss have already been priced into current rates. Further crop losses due to untimely rains could push prices up. The sentiment in rabi crops, chana, mustard seed, wheat, spices, has turned positive as sowing is much behind normal.

October 26, 2019 / 01:12 PM IST

Vedika Narvekar

The southwest monsoon has officially withdrawn. Rains, though, have continued across many agricultural belts. The prolonged monsoon has already delayed the harvesting of kharif crops and the sowing of rabi crops. The kharif-crop delay and output loss have already been priced into current rates. Further crop losses due to untimely rains could push prices up. The sentiment in rabi crops, chana, mustard seed, wheat, spices, has turned positive as sowing is much behind normal.

Meanwhile, the government has declared the minimum support price (MSP) for rabi crops for the marketing year (MY) 2020-21. It hiked the MSP of chana by a decent Rs 255, fixing it at Rs 4,875 a quintal for MY20-21. The MSP of mustard seed was increased by Rs 225 to Rs 4,425; wheat by Rs 85 to Rs 1925 and masoor daal by Rs 325 to Rs 4,800. Higher MSPs ensure better returns to farmers and increases the crop area under cultivation.

The higher assured returns have increased the probability of more chana acreage at the cost of other crops in the ongoing rabi sowing season. Thus, the prices of chana, which rose sharply in the last couple of weeks, declined yesterday on sowing optimism. If the weather turns favourable, sowing, which is much behind schedule, may pick up pace and pile pressure on prices. Release of stocks by the government may also bring about a temporary fall in prices. However, yield losses due to delayed sowing cannot be ruled out and, thus, prices should bounce back.

For mustard seed, too, sowing will progress, post-Diwali. Thus, prices may come under pressure. Yield losses due to delayed sowing would be a major concern for the oilseeds crop, too, and thus the fall would be restricted.

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For kharif grown commodities, including guar, cotton and turmeric, the recent rains are unfavourable for yield and may damage the crop. The IMD has forecast heavy rains in Southern India on the October 25 and 26. Turmeric is a long-duration crop and heavy rains at this time may hurt the crop, which is in a growing stage. Thus, the sentiment for turmeric has turned positive. The upside in turmeric would, however, be limited as long as domestic and export demand are subdued.

The Metereological Department said that, under the influence of a cyclonic storm, fairly widespread to widespread rains with isolated heavy to very heavy rainfall, are likely over the Konkan and Goa, coastal Karnataka, Odisha and coastal Andhra Pradesh in the next 24 hours. In its weather forecast for October 29 to October 31, scattered to fairly widespread rainfall is likely to take place over Odisha, Chhattisgarh and Maharashtra, and isolated to scattered rainfall would take place over Madhya Pradesh, Gujarat and Northeast India. It is thus important to track the weather developments as many kharif crops in Central India are still in the field.

(The author is Research Analyst- Agro Commodities at Anand Rathi Shares & Stock Brokers.)

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Moneycontrol Contributor
first published: Oct 26, 2019 01:12 pm
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