Weather conditions in India may cause food inflation
Weak monsoon rains in India may spark food inflation in the Gulf region over the coming months as tighter supplies pressure prices of basic commodities, traders said on this week.
Monsoon rains, vital for farm output gains after last year's drought, were 24 percent below normal in the past week and unlikely to rebound in the week ahead, the weather office said last week, raising fears of crop loss.
Countries in the Gulf region import most of their food supplies, as farming is a challenge due to extreme heat, limited water supplies and high soil salinity.
Ashutosh Sharma, executive director, Duli Sons, a New Delhi based rice trading firm, said: "At this point there have been a few corrections in the market as there is speculation that crops like basmati rice will drop by 15 percent and this will mean that the bill for importing countries will rise."
Monsoon rainfall was 16 percent below normal in June but heavy showers in early July reduced the deficit to 10 percent. After a dry spell in the past week total rainfall between June 1 and July 16 is 15 percent below normal.
Other crops that traders expect to be affected include maize, oilseeds and soya beans.