Monsoon is the much needed leisure period of everyone’s busy and fast lives. It not only brings rain but a wave of freshness and much needed calm even with all the thunders. Sitting in your balcony with a fresh cup of coffee in one hand and a book in the other with raindrops playing its melody in background and that unique smell of soil meeting with the rain enhancing every senses of yours, portrays a dreamy and romantic image of monsoon. But apart from your mood there are lot more things that are affected by the Monsoon.
As the Monsoon arrives, arrives the big question to whether or not invest in commodity market as it can fluctuate depending on the unpredictable rains and what returns in losses is not very pretty, so why take the risks. This is why traders tend to look up to commodity tips for trading and investing. And for trustworthy commodity tips you can connect with the professional advisory companies like Shyam Advisory.
Moving on to relation of commodity market and monsoon, the IMD’s(India Meteorogical Department) forecast plays a vital role when discussing monsoon effects on commodity market. India depends on its southwest monsoon for agriculture as it is the backbone of Indian Economy. And the Indian agriculture sector largely depends on monsoon as its duration of June to September is crucial for our Kharif crops(July to October) as well as Rabi crops(October to March). The first half of Monsoon is deciding period for Kharif crops as the last month is crucial for Rabi crops as the sowing takes place during those periods and requires the good amount of water for nurturing.
According to the IMD standards,
Rainfall Quantum Interpretation
>90% of the LPA Drought
90%-96% of the LPA Below Normal Rainfall
96%-104% of the LPA Near Normal
104%-110% of the LPA Above Normal
<110% of the LPA Excessive Rainfall
IMD has released its April 2019 Monsoon Forecast and claimed that rainfall quantum is predicted to be near normal at 96% of the LPA(Long Period Average) with standard error of +/- 5%. As per the notification from IMD, El Nino’s conditions will continue to be weak throughout the Monsoon season and might reduce in the latter part of the Southwest Monsoon 2019 season. El Nino means the heating of water in Eastern Pacific region which has great effects on weather conditions across the globe. And La Nina is its opposite which results in better than normal monsoons in India.
Here the equation is clear, the better the monsoon, the better the crops and the more agriculture sector flourishes. Lower monsoon can result in shortage of crops as well as shortage of food supply and it directly affects the manufacturing companies. The black marketer’s businesses high rockets along with the food prices. And the poor farmers are left with no other choices than knocking on the bank’s door or commit suicide. As the large part of India is rural, so a huge populace of bank’s customers are farmers and the low level people of the chain. So the food inflation has great impact on the earnings of these low level populace resulting in a huge losses in bank sectors as the loans are normally being waived for the farmers and it affects our country GDP financially.
Although Monsoon has its fair share of effects on bank, manufacturing, food supply and agriculture, the stats state otherwise when it comes to commodity market. The effect is more psychological than actual. The normal citizens do not have an in depth knowledge of stock markets so they goes by the common sense, if the rain is good, the commodity market will go smoothly. But this is hardly the case anymore.
On the day IMD announces monsoon forecast every year, there are movements seen in the commodity market. The market is so volatile that traders cannot invest without the wise commodity tips. A below normal rainfall forecast results in decline of market whereas some peaks can be seen when normal near rainfall forecast is predicted. This impact is normally temporary and does not show any consistency for more than a week.
The effects are gradually declining as it is no longer a bigger issue. Here are the stats indicating how the sensex behaves against the monsoon:
From the last two years, there is hardly any interdependence between monsoon and commodity market. The overall distribution of rainfall all over the country is what is predicted for this April 2019 which will result in adequate food supply. Good agricultural output will boost the fertilizer, irrigation and FMCG companies. A good rainfall contributes towards many industries eventually boosting Indian economy, but a little shortage or extra will not see many up and downs on the Commodity market. So from the ocean of the commodity tips available, this is definitely not the one to follow.
So, next time you are enjoying the monsoon with your cup of coffee, do not stress about your investments just call a professional advisory company like Shyam Advisory and get some real good commodity tips.