by EasyNewzApp
The monsoon is falling behind, sugar will be the first commodity to take notice.
Keep an eye on this developing story, it could prove material for wheat, rice, ethanol, and vegetable oils prices later this year.
The India Meteorological Department provides the below link tracking the arrival of the seasonal monsoon. Many crops depend on the monsoon for timely planting, reservoir replenishment, and rebuilding soil moisture. India’s monsoon is falling further behind, putting crop production at risk. Wheat, sugar, and rice are three markets traders should be watching, but sugar and then ethanol may be the most at risk today.
The normal progression of the monsoon is the lower third of the country covered by June 10 and the southern and western half by June 15. Today, barely 20% of the south has received moisture. Temperatures have been sweltering due to the strengthening of El Niño and the tendency for the monsoon to disappoint. The following two weeks will be critical for the monsoon to catch up or fall further behind.
The world’s largest population has a massive sweet tooth, and the ethanol industry has exploded, making India the world’s largest consumer. The country relies on domestic production to supply much of its demand. Global prices are already at decade highs due to years of underinvestment in the industry globally.
Brazil’s export capacity will be limited due to its massive grain program already underway. Speculators had built a record-long position before the May sell-off, but the market has consolidated. If the monsoon is a bust, the risk is higher prices for the sweetener and ethanol in the coming months.
TL;DR: The monsoon is falling behind in India, which could lead to higher prices for wheat, rice, sugar, and ethanol later this year.