85% chance of below normal monsoon: Skymet Weather

One of the macro factors that the market has been quite worried about is the recent monsoon trends. While this is the crucial month for the season and its performance, things haven't started off on a very good note.

Jatin Singh of Skymet Weather Services believes that it will be a weak monsoon this year. In an interview with CNBC-TV18 he said, the places that really need to worry would be West, North West India along with East and North East India. With the onset of monsoon in this part of the country would be about 10 days later, it does not give a good signal.
He further added, "According to us, there is 85% chance of a below normal monsoon and there is 40% chance of drought. So you will see a recovery, most of the recovery will be concentrated probably in Central India and North India. But in terms of it gaining all the way back to normal, according to our calculation, is slightly on the optimistic side." Below is the edited transcript of his interview with CNBC-TV18. Also watch the accompanying video. Q: What is your analysis for performance of monsoon in the month of June?
A: You are already running at -31% with -17% North India, + 6% in Central India, 0% in South India and at -44% in East and North East, so obviously, the situation is grim. Paddy has suffered in terms of the number of acres for sowing. There is a recovery on the way, right now in July but I don't think this recovery is going to be as strong as some people believe it to be. We believe this is more or less going to be a weak monsoon. Q: Where is the situation most grim in terms of regions?
A: The places that really need to worry would be West and North West India, along with East and North East India. For instance, North India is -17% and the Delhi-Chandigarh area is at -92%.
In North India, monsoon is already 10 days late. Delhi should have expected the monsoon on June 27 and today, it is July 4. We haven't seen anything. There should be rain tonight and tomorrow in Delhi. It will begin to rain in Haryana and Punjab couple of days after that. Effectively, the onset in this part of the country would be about 10 days later and that is not good. Q: What do historical trends suggest in terms of what happens when there is a slowdown in June and how fast a pick up can be in July? The official word till now is that it is 30% efficient but this is the month that counts and this is the month probably where there is going to be a pick up and a catch up?
A: That is true; first you need to see statistically. Even in the worst case scenario you will get 70% of rainfall, so -31% if you look at 130 years of averaging, you will get 70%, hence, -31% is at the end of it. There has to be a recovery even statistically speaking. But there is a big gap between -31% and 0%.
Our speculation right now or calculated guess is recovery till 0% sounds unlikely. According to us, there is 85% chance of a below normal monsoon and there is 40% chance of drought. You will see a recovery and most of the recovery will be concentrated probably in Central India and North India. But in terms of it gaining all the way back to normal, according to our calculation, is slightly on the optimistic side. Q: Even if it does recover in terms of quantum then what are the prospects in terms of big spatial disappointment?
A: In terms of quantum, there are two schools of thought. One, our guess is that even from a point of quantum; the recovery will not be that strong. Second, even if you recover in quantum, effectively from agriculture cycle perspective, you are looking at inconsistent rains that is long dry spells interspersed with heavy rainfall and that is not good. Either way, the calculations need to be more on a conservative side.
In terms of spatial performance, Rajasthan is at a very high risk. Across all seasonal models you always see Rajasthan, West Rajasthan, northern part of Gujarat, then Haryana, Punjab, western parts of Madhya Pradesh being on high risk side and then on the eastern and north-eastern side. Effectively, paddy crop is the major issue in north and east India this year.
We think that cotton as well as soybean should be able to make through it. Sugarcane, because the acreage has increased, even in total volume, if it goes down, the acreage will be able to compensate for that. But paddy in the North West and eastern India would have issues this year.