Food Prices may Stay Put till Diwali

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Gold Silver Reports — If Diwali was a little later this year, it may have helped consumers. In all likelihood, food prices will start to ease as the harvest comes to an end in November.

Thanks to a good monsoon and kharif sowing, prices of essential food items are expected to hold steady till the start of the harvest season and reduce marginally after that.However, overall food prices are higher now than during the festival season last year.

Commodities such as wheat, sugar and rice are currently costlier than they were last year. So, even if they remain stable or decline marginally, consumers will pay more for them than they did last Diwali.Only cooking oils and pulses are expected to be cheaper. If the monsoon is good, prices may start to decline substantially only from November, after Diwali, which falls on October 30 this year.

“Current commodity prices are high and could remain elevated till Diwali. During Diwali, demand is at its peak but harvest begins only from the second half of October,“ said Prerana Desai, vice-president at Edelweiss Agri Value Chain. The markets are still worried about the monsoon being affected by La Nina, a phenomenon associated with excess rainfall in India. Since the start of the monsoon season on June 1, rainfall was 1% above normal.

“Weather risk is not over yet as there is possibility of La Nina affecting monsoon rains and this risk will not allow prices to come down substantially. Weather premium will remain till the harvest has been completed,“ said Desai.

Even with widespread sowing and good rain, the markets say a clear idea of commodity prices will emerge only after the harvests are completed.

The prices of pulses, barring chana, are expected to decline further closer to the harvest period w i t h prospects of a good domest i c c r o p.Sowing of tur dal has been about 40% higher so far. – Neal Bhai Reports