Indian sugar mills association

Monster El Nino Just a Western Ghost Story: IMD

Date:	24 Mar 2014

Source:	The Economic Times

Reporter:	Madhvi Sally

News ID:	3194

Pdf:
Nlink:

Weather scientists from Australia to the US are seeing ominous signs of a ‘monster El Nino ’ that heightens the risk of a drought in South Asia this year, but India’s weather office is snarling at these forecasters and accusing them of conspiring to rattle the country’s commodities and stock markets.

El Nino, or ‘little boy’ in Spanish, refers to changes in the direction of winds and the flow of warm water currents that raise the surface temperature of parts of the Pacific Ocean. It shakes up global rainfall and storm activity, causing droughts and floods in different parts of the world. In India, it coincided with droughts in 2002, 2004 and the driest monsoon in four decades in 2009, which inflated food prices sharply and launched a stubborn bout of inflation that prompted the central bank to tighten monetary policy and encouraged a clampdown on farm exports despite bulging stocks.
This year, American scientists say meteorological data point to a repeat of the ‘monster El Nino ’ that struck in 1997-98. They also say the dreaded phenomenon, which can last a year or more, would make 2015 the warmest ever. But the India Meteorological Department, which has often failed to predict a drought, does not believe the ‘little boy’ will spoil India’s monsoon party. They are Spreading Rumours: IMD Chief
“It is in the US and Australian interests that agri commodities and stock market in India come down. They are spreading rumours. People will start hoarding and might start creating artificial scarcity of commodities. Don’t heed their advice,” said Laxman Singh Rathore, director-general, IMD.
His concerns are understandable as El Nino has not always caused a drought. IMD’s monsoon forecast, expected during elections next month, will set the mood for the vast majority of Indians since they depend directly or indirectly on farm income although agriculture’s share in GDP has diminished as manufacturing and services clocked faster growth. Some foreign banks and analysts are already saying that India’s agricultural growth may suffer, which could raise food prices and encourage the Reserve Bank of India to keep interest rates high.
Rathore said it was well known that monsoon was a sensitive issue for India, where a huge percentage of farmers and the country’s economic interests depend on the rainy season as irrigation facilities are inadequate. “In the past one month, there have been a number of forecasts and certain agencies have retracted from their forecasts too,” he said. But more and more foreign forecasts are pointing to a gloomy monsoon. Last week, Chinese forecasters predicted that El Nino would affect rainfall this year. Japan’s weather office, the US Climate Prediction Centre and Australia’s Bureau of Meteorology have made similar predictions.
India’s private weather forecaster Skymet sees a 60% chance of a drought this year, and does not share Rathore’s perspective on a conspiracy by scientists of the developed world. Jatin Singh, CEO of Skymet Weather Services, said he doesn’t feel there is any plot. “There is no conspiracy. The correlation betweenEl Nino southern oscillation and Indian summer monsoon rainfall is well known since the 1980s,” he said. Skymet will issue its monsoon forecast on April 15 while IMD is likely to release its prediction in the second half of the same month. Singh ruled out any chance of this year’s rainfall being excessive. Economists and analysts feel there is a correlation between the Indian monsoon and agri markets, particularly certain commodities grown in rain-fed areas.
“Disseminating speculative reports of likely poor spread of rainfall during monsoon may not be of much political interest, but it could benefit private commercial interests,” said Jayanth R Varma, professor of finance at IIM-Ahmedabad, who is working mainly in the field of financial markets.
He said volatility could be seen in agri commodity exchanges for crops such as soyabean and guar, which are weather-dependent.
In March, prices of potato, sugar and wheat rallied on the National Commodity & Derivatives Exchange. “The price of potato has seen a sharp rally of over 30% to . 1,230 a quintal in a month. Similarly, sugar, which was quoting at 2,800 a quintal, is now at . 3,100 and could touch the previous high of . 3,600 if the news ofEl Nino is confirmed,” said Dharmesh Bhatia of Kotak Commodities Pvt Ltd.
IMD defines a drought year as one in which the overall rainfall deficiency is more than 10% of the long period average and if more than 20% of the agricultural area is affected. “In my estimate, monsoon in 2014 will be somewhere between 2012 (7% below normal) and 2009 (27% deficit),” said Singh. El Nino affected the monsoon in both the years. Land preparation and sowing of kharif crops, largely paddy, soyabean, cotton, pulses (arhar and moong), and coarse cereals such as bajra and jowar picks up with the onset of monsoon.

News

Navigation