X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Rice: Rising prices - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 6, 2009

    Rice: Rising prices

    The delay in advanced crop output estimates for the kharif season has raised fears that the decline in rice output this season could be more than the government projection of 10 m tonnes, forcing India to resort to imports. According to the government, rice production is projected to drop from 99 m tonnes last year to 89 m tonnes this year due to drought However, a report by the United States Department of Agriculture (USDA) pegged the drop in India's rice output at as high as 17 m tonnes, which means production at around 82 m tonnes. This is while India's annual rice consumption is about 89.5 m tonnes.

    Though the new rice marketing season started from 1st October with about 17 m tonnes of rice stocks, well above the minimum buffer norm of 5.2 m tonnes, retail prices are already up by 14% YoY. This is because the market is sensitive to production shortage signals and it got jittery after several nervous decisions of the government such as delaying the advance estimates on crop output, extension of stock holding limits by traders and continuing with the export ban on non-premium rice.

    While the planning commission has stated that food prices would reduce in the coming months due to reduction in speculative activity, the market is expecting the prices to climb higher as the shortfall puts pressure on existing stock and the government buys rice for its welfare and PDS priorities.

    Meanwhile the government to check prices has eased exports of Basmati rice while indicating that the private sector should import at least twice non-Basmati rice for every tonne of Basmati exported.

    What we expect?
    While there is definitely a large shortfall in rice output this year, the buffer stock seems to be more than adequate to tide over this shortage. While the government is taking steps to ensure that adequate supply is available, the recent steps are sending out mixed signals leading to speculation. However, we are concerned about the impact of the recent floods on the paddy crop in Andhra, which is a major rice producing state. Under such circumstance, we would like to wait and see what the actual rice production numbers look like and how the government faces up to the situation.

     

     

    Equitymaster requests your view! Post a comment on "Rice: Rising prices". Click here!

    1 Responses to "Rice: Rising prices"

    Reiagro

    Oct 7, 2009

    pleasw tell me about reiagro

    Like 
      
    Equitymaster requests your view! Post a comment on "Rice: Rising prices". Click here!
     

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    MARKET STATS