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LATEST NEWS UPDATES | Demand for agriculture inputs cools on dry spell -R Sree Ram

Demand for agriculture inputs cools on dry spell -R Sree Ram

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published Published on Sep 9, 2016   modified Modified on Sep 9, 2016
-Livemint.com

While higher crop acreage should ensure positive growth, much depends on how September rains pan out and the kind of platform it lays out for the next crop season

Caution is finally setting in for agriculture inputs stocks. As the weather office released two rain deficit reports (on a cumulative basis), shares of Rallis India Ltd, Dhanuka Agritech Ltd and Gujarat State Fertilizers & Chemicals Ltd lost a bit of ground since the beginning of the month.

The correction was waiting to happen. The stocks attached little importance to bad weather reports in August—a long dry spell, instances of floods and drought in parts of Andhra Pradesh and Karnataka. The southern region, which constitutes a sizeable market for agriculture inputs, saw significantly less rainfall in August.

Though rains gathered pace in last week of August, the shortfall in first three weeks of the month weighed on demand in the region. “Our three days-three cities Agri Yatra suggest weaker than initially expected agrochemicals consumption (but much better YoY) due to tapering monsoon intensity, inventory glut and acreage moving away from cotton,” Investec Capital Services (India) Pvt. Ltd wrote in a note.

According to Investec, the dry spell also led to a pile-up of complex fertilizer inventories in Telangana and Andhra Pradesh. However dealers and companies are confident of clearing the inventory in current crop season, provided the monsoon picks up in September.

If the rains do not keep pace, they can not only slow demand in the southern region but can also dim outlook for the next season. A person who tracks the sector says farmers can skip one or two agrochemical sprays if the dry spell continues.

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Livemint.com, 9 September, 2016, http://www.livemint.com/Money/PZZKmok3yHdPgP6tzxb8HP/Demand-for-agriculture-inputs-cools-on-dry-spell.html


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