A Delayed La Niña Bodes Well For Crop Harvests This Monsoon, Say Analysts

Analysts see a lower possibility of crop damage in this harvesting season amid expectations of a delayed La Niña. They also noted that rice, pulses, and coarse cereals drove the increase in sowing area in this Kharif season while cotton weighed.

"With La Niña now expected to emerge in November rather than September, the likelihood of above-normal rainfall in September is low," said Emkay Research in a note. "This bodes well for the harvesting season as the possibility of crop damage reduces," the note said.

La Niña, which recurs every three to seven years, is a climatic condition in which trade winds are even stronger than usual, pushing more warm water toward Asia, leading to an above-average rainfall in some areas.

Barclays, in a report, explained that while there is a variation in timelines of two agencies, including the India Meteorological Department and the Indian National Centre, "both indicate a delay from earlier predictions of La Niña developing from July-August."

It pointed out that the excess rainfall was concentrated in western and select northwestern states, but for August, rainfall was largely normal to below normal, barring excess rains in southern states and Rajasthan.

Emkay Research noted that with over 95% of kharif sowing completed so far, the harvest should be healthy, unless there is adverse weather in September and October.

However, according to Barclays, the area sown in this Kharif season was at 97% of normal. "Overall, the area sown this year is about 1.9% higher year-on-year, driven by increases in acreage of rice, up 4.3% on year, coarse cereals up 4.5%, and pulses up 5.7%.

Both brokerages noted that cotton sowing remained low. According to Barclays, it fell 9.2%. It said, "Sowing in cotton has lagged throughout the season and is unlikely to close the gap with last year."

This strong pace of sowing has also led to a softening of prices of vegetables, cereals, pulses, oil & fat, and milk in recent weeks due to higher supply, Emkay said, but they are expected to remain stable at current levels until the harvest brings more supply to markets.

Barclays also compared the reservoir storage levels with 2022 and said that they are elevated and "may close the gap if the current rainfall pattern persists".

Emkay said of the major river basins, only the Indus (North) is in deficit, with Godavari (West and South), Narmada (Central and West), Kaveri (South), Ganga (North and East), and Mahanadi (Central and East) in surplus.