Report Highlights:

Timely and adequate 2015 monsoon rainfall through early July has supported planting of grains, including rice and corn, in the ongoing MY 2015/16 kharif season (fall/early winter harvest). MY 2014/15 and MY 2015/16 rice exports estimate has been raised higher to a record 11.7 MMT and 10.0 MMT, respectively. Consumption has been revised lower to account for higher exports.

2015 Monsoon Begins Strong …

The Indian Meteorological Department (IMD) forecast a 'deficient' 2015 southwest monsoon with the second long-range forecast update predicting the seasonal rainfall to be 88 percent of normal long-term average (LTA) of 89 cm (error of ± 4 percent). El Niño conditions are likely to gain strength during the course of monsoon season.

The southwest monsoon arrived on coastal Kerala on June 5, 2015, and progressed strongly to cover the entire country by June 26, almost twenty days before its normal schedule. Overall precipitation during the month of June was at or above normal levels in most parts of India. However, the 2015 monsoon has weakened since the first week of July, 2015. As per the latest update from IMD, the cumulative precipitation from June 1 to July 22 was seven percent below the seasonal LTA of 367 mm. Of 36 total meteorological sub-divisions, rainfall was normal to above-normal in about 24 sub-divisions, and deficient in 12 sub-divisions. Northern, central, and most of southern and eastern India received normal to above-normal levels of rainfall, while Maharashtra, Gujarat, Eastern U.P, Bihar, Kerala, parts of Karnataka received deficit rains.

The IMD's weekly press release forecast normal monsoon rains over northwest, central, northeast and eastern parts of the country but will remain week over the interior peninsula till first week of August.

… Provide Favorable Planting Conditions

Timely and sufficient 2015 monsoon rainfall through early July has supported planting in the ongoing MY 2015/16 kharif season (fall/early winter harvest) for grains like rice, coarse grains (corn, sorghum, millet), and pulses (pigeon pea, mung beans, black matpe) in the key producing areas. Planting of coarse grains and pulses, typically sown in unirrigated areas, has been significantly ahead of last year on sufficient rains and optimal soil moisture conditions.

Kharif planting is likely to be over by mid-August in most areas, excepting for some rice production areas in southern India. However, deficient monsoon rains over the next two weeks in western and peninsular regions could affect the production prospects, particularly for coarse grains and pulses in the rainfed areas. Further dry weather in the southern peninsula may also affect rice planting in Andhra Pradesh and Tamil Nadu, where transplanting continues through early September.

Timely planting and sufficient rains through most of July in the major grain producing states is likely to support MY 2015/16 kharif grain production prospects. However, sufficient rains throughout August and September will be critical for achieving forecast normal yields. September and October precipitation is also critical for replenishing the reservoirs and ground water required for irrigation during the planting of rabi season (winter planted) grains to include wheat, rice, corn, barley, sorghum, and some pulses.

RICE

(Area in Thousand Hectares, Quantity in Thousand Metric Tons)

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

India

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

43940

43940

43000

43000

44000

44000

Beginning Stocks

25440

25440

22651

22651

15600

15600

Milled Production

106540

106540

102500

102500

104000

104000

Rough Production

159826

159826

153765

153765

156016

156016

Milling Rate (.9999)

6666

6666

6666

6666

6666

6666

MY Imports

0

0

0

0

0

0

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

131980

131980

125151

125151

119600

119600

MY Exports

10149

10149

10200

11700

8500

10000

TY Exports

10907

10907

11000

11500

8500

10000

Consumption and Residual

99180

99180

99351

97851

99500

98000

Ending Stocks

22651

22651

15600

15600

11600

11600

Total Distribution

131980

131980

125151

125151

119600

119600

Progress of Planting

Buoyed by timely and adequate monsoon rainfall, rice area planted through July 24, 2015 is estimated higher at 18.9 million hectares compared to 17.7 million hectares last year. Nevertheless, current year planting is slightly behind the planting in the record crop year MY 2013/14 and the normal (5-year average) planting for the corresponding period.

Planting of long-grain Basmati rice in Punjab, Haryana and western Uttar Pradesh, as well as rice in coastal Andhra Pradesh and Tamil Nadu will continue through the end of August-early September. Basmati area is likely to reduce this year due to relatively weak prices last year that affected farmer earnings in 2014.

A clear picture for India's MY 2015/16 rice production prospects will emerge by end of August after planting is over in most states. Assuming normal rainfall levels during August, Post continues to forecast MY 2015/16 production at 104 MMT from 44 million hectares. However, deficient rains and/or prolonged dry spells in August and September could lower the current forecast, while sufficient and well distributed rains during August and September and absence of any major cyclonic build up in September and October may improve the production prospects.

MY 2014/15 Government Procurement Up; But Stocks Decline

Total government MY 2014/15 rice procurement through July 23, 2015, is estimated at 31.6 MMT compared to 31.3 MMT during the same period last year. Procurement in the traditional surplus states of Punjab, Haryana, Chhattisgarh, Andhra Pradesh and Telangana has been lower than last year. However, higher procurement in the eastern states has more than offset the lower procurement in the traditional states. With the procurement tapering off in coming months, MY 2014/15 rice procurement is likely to reach 32.0 MMT.

Despite sufficient procurement, government-held rice stocks on June 1, 2015, were estimated lower at 22.7 MMT compared to 28.3 MMT a year ago, with the drawdown attributed to higher disbursement of rice under various government food programs. Assuming the current pace of offtake during July through September, October 1, 2015, government rice stocks are projected lower at 11.6 MMT compared to 17.6 MMT at the same time last year, but still higher than the government's desired October 1 stocks of 10.3 MMT.

Prices Ease

Despite relatively firm export demand, domestic prices have eased since June 2015 on sufficient harvest of rabi (winter planted) rice and weak domestic demand.

Satisfactory planting of MY 2015/16 rice crop is likely to keep prices steady in the next couple of months. However, price movement during MY 2015/16 will depend on the harvest prospects of the upcoming crop and international price movement.

Exports Raised . . .

Post's MY 2014/15 rice exports estimate has been raised higher to a record 11.7 MMT based on continued higher than anticipated exports in the second half of the marketing year. Stable domestic prices coupled with continued strong export demand have fueled Indian rice exports since the beginning of the marketing year.

According to the available preliminary export figures, MY 2014/15 rice exports through June 2015 are estimated at 9.0 MMT, about 1.6 MMT higher compared to last year's exports during the corresponding period. Market sources report continued strong exports to the traditional Middle East and African markets and neighboring Bangladesh and Sri Lanka. Expected steady export demand and domestic prices during the last quarter is likely to raise MY 2014/15 exports to a record 11.7 MMT, and CY 2015 exports are estimated higher at 11.5 MMT. Assuming no major changes in the international market and Indian export policy, MY 2015/16 and TY 2016 rice export forecast is raised higher to 10.0 MMT, but lower than this year's anticipated record exports due to forecast tight domestic supplies. However, export prospects could be affected if the production prospects are affected by weather abnormalities and/or the Government of India imposes export control measures on price concerns in the domestic market.

… Consumption Lowered

MY 2014/15 and MY 2015/16 consumption estimate has been revised lower to 97.9 MMT and 98.0 MMT respectively, to account for the higher export estimate.

CORN

Planting Progress

Favorable early 2015 monsoon rains have boosted corn area planting through July 24, 2015, higher to 6.4 million hectares compared to 4.6 million hectares last year. However, current year planting still lag behind the record production year MY 2013/14 planting of 7.1 million hectare during the corresponding period. Planting is likely to continue through middle August as IMD's forecast normal rains will support additional corn planting in the central and eastern states. However, forecast deficient rains in peninsular India may affect planting in the key states of Maharashtra and Karnataka. Post continues to forecast MY 2015/16 corn production at 23.5 MMT assuming normal precipitation through August and September. Should monsoonal rains be deficient in August and September, the kharif corn yield and planting prospects for the rabi season (planted on October-November) and winter corn (planted in January) will be negatively affected.

Prices Stable

Domestic corn prices during June and July have remained relatively stable on relatively weak demand, both export and domestic.

Market prices in the major production states currently range from INR 10,600 ($166) to INR 13,900 ($218) per metric ton (spot). Prices are expected to remain stable in August, but future prices will largely depend on the outcome of the monsoon, as well as and international prices.

Weak Exports

Relatively weak international prices has adversely affected Indian corn exports since the beginning of MY 2014/15.

Preliminary MY2014/15 corn exports through June 2015 are estimated at 820,000 MT compared to 3.25 MMT during the corresponding period. Most of the recent corn exports are limited to neighboring Nepal and small quantities to south Asia. Relatively high domestic prices are likely to continue to constrain any significant corn exports during the balance of the marketing year. Consequently, the MY 2014/15 export estimate remains unchanged 1.0 MMT.