(Bloomberg) -- India's winter crops may be at risk this year as insufficient showers in some key regions reduced dam levels.
The country's 91 main reservoirs held 103.43 billion cubic meters of water as of Sept. 28, down 13 percent from the 10-year average, according to the Central Water Commission. The total volume was 66 percent of the combined storage capacity, compared with 74 percent a year ago, it said.
The June-September monsoon season is critical to India's agriculture sector as it directly waters more than half of all farm land and helps fill dams that irrigate crops during winter. This year's monsoon was below normal, with 17 percent of the country receiving insufficient showers. Rainfall was normal last year after back-to-back deficits.
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“If one looks at the reservoir levels, the winter crop is certainly at risk.” said Suvodeep Rakshit, senior economist at Kotak Securities Ltd. “The risk increases in terms of prices because when there is some uncertainty about production, a lot of speculative players enter the market."
India's four-month rainy period, which accounts for more than 70 percent of annual precipitation, was below normal this year. Showers totaled 841.3 millimeters, or 95 percent of the 50-year average, in the season, according to the India Meteorological Department. A monsoon is defined as normal when rain is between 96 percent and 104 percent of the long-term average.
The area under winter-sown crops, including wheat, pulses and mustard, is likely to be lower than last year on unfavorable weather conditions and depressed prices of some agricultural commodities, Veeresh Hiremath, head of research at Hyderabad-based Karvy Comtrade Ltd., said by phone. “Imports of wheat and vegetable oils are going to rise.”
India is aiming to produce 137.6 million tons of food grains, including wheat, oilseeds and pulses, during the winter crop season, which typically starts in October. That compares with 137.2 million tons produced a year ago, according to the farm ministry. Any drop in output will potentially boost imports of wheat and vegetable oils into the country, the world's second-biggest producer and consumer of the grain and the top buyer of palm oil.
Lower water level in reservoirs "could be a concern going ahead as it will determine the supply of water for both households and farming purposes for the rest of the year," CARE Ratings Ltd. said in a report on Oct. 3.
Output of monsoon-sown food grains will probably drop 2.8 percent to 134.67 million tons from a year earlier, according to the farm ministry's first advance estimates. Production of rice, the biggest food grain crop of the season, is seen falling around 2 percent to 94.48 million tons, it said. Harvesting typically begins in October.
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