Agri commodity prices unlikely to hit by El-Nino effect

Lower agricultural production in El-Nino years disturbs the supply demand equation of many agricultural commodities and leads to higher prices, the National Collateral Management Services (NCML) on Monday said.

Mumbai: Agri-commodity prices are unlikely to be affected even if there is lower rainfall due to El-Nino impacting production, the report said.

Lower agricultural production in El-Nino years disturbs the supply demand equation of many agricultural commodities and leads to higher prices, the National Collateral Management Services (NCML) on Monday said.

The monsoon season, in which the country receives more than 70 percent of its annual rainfall, will commence in a couple of months and is expected to be affected by El-Nino this year.
During El-Nino there is below normal rainfall leading to decline in food production in the country.

"Despite lower production, prices of agri-commodities may not be affected due to large buffer stocks with the government," NCML managing director and CEO Sanjay Kaul said.

Government initiatives of maintaining buffer stocks of wheat, rice and pulses may arrest aggressive gains in prices of these commodities, he added.

However, India being a largest importer of edible oils in the world, expected lower production of oil seeds during 2019, will increase the import dependency of edible oils, the report said.