Agri roundup: How the drought is likely to pan out

UR Associates has come out with its report on agri space.

The monsoon deficiency situation is improving but the improvement is gradual and might ultimately leave the country with a drought situation. The monsoon deficiency for the June 01- August 10, 2012 period has fallen from 19% to 17% below normal with deficiency in East & Northeast India at 12%, Northwest India at 31%, Central India at 11% and South Peninsula at 18%. For the second half of the monsoon season (August to September), IMD has predicted that rainfall will be below normal at 91% of long period average with a model error of ±8%. There is a strong possibility of weak to moderate El Nino conditions to emerge during the next two months which is likely to have adverse impact on the rainfall over the country. Fertilisers and Chemicals Q1 net profit up 21%- Chambal Fertilisers and Chemicals posted 21% jump in net profit to Rs 770.6 million for the April-June quarter this year. The company had clocked a net profit of Rs 636.9 million in the same period last year. Net income rose to Rs 13.64 billion in the first quarter of the current fiscal, against Rs 11.52 billion in the year-ago period. The company said its total expenses rose to Rs 12.32 billion from Rs 10.57 billion in the review period. Apart from fertilisers, the company is also into agri-inputs, shipping textiles, software and infrastructure. Sugar mills’ body maintains output forecast at 25 million tones- Even as pressure builds up on the Centre to curb sugar exports to boost domestic supplies, the industry has maintained that production next year would be 25 million tonnes. This production forecast by the Indian Sugar Mills Association (ISMA) has come despite concerns over drought in parts of Maharashtra and Karnataka. Uncertainty over next year’s crop has already sparked a rally in sugar prices that are hovering around Rs 40 a kg in retail outlets. Unconfirmed sources said that the Government was contemplating a ban on sugar exports or may impose a 10% levy to curb shipments. ISMA officials clarified that there would be ample stocks at the start of next season in October and that India would remain a net exporter for a third year in a row. They also said that domestic prices had turned attractive for the millers and no fresh export contracts were being signed.
 
GSFC Q1 net up 22% at Rs 1,730 million- State PSU Gujarat State Fertiliser and Chemicals (GSFC) today posted 22% increase in net profit at Rs 1,730 million for the first quarter ended June 30. The company's net profit stood at Rs 1,420.8 million in the corresponding period last year. Net sales of the company grew by 17% to Rs 14.12 billion in the reported period against Rs 12.07 billion in the corresponding period of 2011-12. The results were influenced by suppressed international chemical market and limited availability of raw material for DAP fertiliser, a company statement said. The company is exploring possibilities to secure supply of basic raw materials like phosphoric acid and potash among other from foreign countries, it said. USDA raises global cotton stock estimate- The government raised its estimate for global inventory for the marketing season which ends next July by 3% to 74.67 million 480-lb bales, based on its first field surveys for this season, would set a new record, beating the previous high, which was last season, by 10%. The government lowered its production estimate for the country (India), where weather forecasters have warned of a potential drought due to weak monsoon rains, by 500,000 480-lb bales to 23.5 million 480-lb bales. But that was more than offset by the increase in its output forecast for China and the United States, the world’s No. 1 and three producers.  India's tea output up 6.5% in June- India's tea production rose for the first time in nine months in June to 122.2 million kg, up 6.5 percent from a year earlier, as plucking improved in north-eastern and southern parts of the country, the state-run Tea Board said in a statement. However, the country's tea production in the first six months of 2012 fell 5.7% on year to 338 million kg as unfavourable weather in the top-producing north eastern state of Assam state hampered plucking earlier this year. Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

Read More