India's monsoon improves, eases Kharif crop risks: Macquarie report

India's monsoon situation has improved significantly in recent months and eased concerns over widespread disruption to Kharif crop, although rainfall distribution remains a major factor to watch, according to a report. A report by global brokerage Macquarie said that the cumulative rainfall deficit had narrowed sharply to 12.6 per cent as of Aug 19 from 35 per cent in June.

“The situation is recovering, albeit not fully recovered,” it added. The improvement has also been reflected in Kharif sowing, which has recovered considerably after a weak start to the season. As of Aug 14, total Kharif sowing was 2 per cent below last year's level, compared with a 21 per cent shortfall in late June, according to the brokerage. In addition, rice acreage was 3.7 per cent below last year, while maize acreage was down 4 per cent.

In contrast, acreage under pulses, oilseeds, sugarcane and cotton was within around 1 per cent of year-ago levels. Macquarie said the remaining weakness in sowing was largely concentrated in a few crops rather than being broad-based. Moreover, healthy reservoir levels are also providing a buffer against the rainfall deficit. Reservoir storage remains at or above the 10-year average in Maharashtra and Gujarat, while key agricultural states including Uttar Pradesh, Madhya Pradesh and Punjab have storage levels at around 80-100 per cent of their respective averages. However, Bihar and parts of southern India warrant close monitoring.

The improving monsoon, limited shortfall in overall sowing and adequate irrigation reserves have collectively reduced downside risks to Kharif output, the report said. It further noted that the development is also positive from an inflation perspective, with food-supply and inflation risks moderating from June levels.

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