New Delhi: India’s monsoon delivered the season’s heaviest rain in the past week, boosting reservoirs and prospects of winter crops, but sugar stocks were set to sink to the lowest in 15 years and food prices soared.
Food prices jumped an annual 15% by end of August although the widely watched wholesale price index fell for the thirteenth successive week in the slowing economy.
Food-driven inflation, however, was unlikely to trigger a rise in interest rates, analysts said.
The weather office said rainfall was 21% above average in the week to 9 September, continuing the upturn since mid-August but total seasonal rainfall was a fifth short of normal since the season began with the driest June in eight decades.
Dry spells have ravaged more than half the crop sown in 250 of India’s more than 600 districts, but recent rains have helped improved soil moisture, which is important for winter-sown crops such as wheat and soybean.
The seasonal rainfall deficit was the widest in the Uttar Pradesh, India’s biggest cane grower, raising prospects of large imports by the world’s top sugar consumer, and lifting raw sugar futures.
Indian spot sugar prices were flat on Thursday as worries of supply glitches were balanced by government steps against hoarding, and restrictions on the amount of stock that large consumers can keep.
India had contracted imports of about 5 million tonnes of raw sugar, of which 2.4 million tonnes had already landed, farm minister Sharad Pawar told a meeting of the National Federation of Cooperative Sugar Factories Ltd.
The industry body’s president, Jayantilal B. Patel, told Reuters on the sidelines of the meeting that India’s sugar stocks on 1 October, the start of the new season, would fall to 2.7 million tonnes, the lowest in 15 years.
Pawar said the recent revival of monsoon rains would help both the yield and sugar content of cane, apart from boosting soil moisture that is vital for winter-sown wheat.
Higher rainfall in the past week has helped India’s 81 biggest reservoirs fill up much faster than normal for this time of year.
Reservoirs are important for hydropower, which accounts for a quarter of India’s generation capacity. They also provide water to irrigate winter crops.
Federal power secretary H.S. Brahma told reporters that he expects India’s hydropower generation to rise in the next 10 days as rainfall had improved.