The India Meteorological Department's forecast of early monsoon has come as a respite for the Central government, which has been drawing flak from all corners for its failure to rein in inflation.
According to experts, an early monsoon combined with increasing warehouse stocks may bring the prices of agro-commodities down.
The expectation of a good and early monsoon this year has also brought back hopes of higher production and productivity to millions of farmers, which in turn will help curb price rise.
Prices of gaur and chana have fallen while that of many other commodities have turned bearish on the news of early rains.
While market analysts are non-committal on the effect of the early monsoon, some of them feel that a good distribution of rain would put a downward pressure on prices of agro-commodities.
It will be too early to take a call on the impact of monsoon on various crops as it is the spatial distribution of rains over the next three months that will be crucial to the country. A delay in monsoon would firm up prices, but actual distribution of rains is what matters now.
Wheat, guar and mentha are among the commodities that the analysts would be focusing on as they arrive in June. Because guar gum and mentha oil are exported, the appreciating rupee has had an adverse effect on the exports and thus the expectation of an availability of huge stocks is putting downward pressure on prices.
Taking into consideration the recent rainfall over north-western parts of India and prediction of early and normal monsoon, production of major agro-commodities are expected to increase in the year 2007-08. This might pressurise the prices in short-term especially in Kharif crops like turmeric, guar seed, soybean, chilli
