NEW DELHI (Reuters) ? Monsoon rains in August will be crucial for India, one of the world's biggest producers and consumers of sugar and rice, after rainfall was 23 percent below normal in the week to July 27 in a sharp reversal from the previous week.
The monsoon, essential for the 60 percent of the country that does not have irrigation, was below normal in particular over rice and cotton growing areas of south and western India, data from the weather office on Thursday showed.
Cane growing areas in the north and west also received poor rains, but soybean growing areas in central India had good rainfall.
The weather office had forecast rains 7 percent below the average for July, but the latest data put the shortfall in the monsoon so far this month at 14 percent.
"Rains at regular intervals are important for growth. Now August rains will be very crucial," said Vimala Reddy, an analyst with Karvy Comtrade, a brokerage based in Ahmedabad.
The below-average rainfall could continue in early August, a source at the weather office who requested anonymity said.
"The current weak phase is expected to prevail early next week, and (rains) could then revive in the south, northeast and northern foothills," the source said.
The monsoon rains were 5 percent below average from June 1 to July 28, mainly due to poor rains over rice-growing areas of eastern India and cotton-growing areas in the south.
Forecasting the monsoon is notoriously difficult. In 2009, India had its worst drought for over three decades, forcing it to buy sugar and boosting international prices, after the weather office had predicted a normal monsoon,.
"If poor rains continue for the next two weeks, then there could be a problem, while rains at regular intervals will ensure enough moisture in the soil to keep crops healthy," said L.S. Rathore, head of the farm division of the weather office.
RICE, SUGAR, CORN, COTTON
Most at risk among food crops could be rice, sugar cane, corn and lentils, while cotton could also suffer.
"A long, dry spell during the growth stage may reduce crop yield prospects" for all rainy season plantings, said Prasoon Mathur, a senior analyst at Religare Commodities.
Rainfall over West Bengal and Orissa will be crucial for rice, while that over Andhra Pradesh will be key for rice, corn and cotton.
Rains in West Bengal were 2 percent above normal last week, while in Orissa and Andhra Pradesh they were 36-37 percent below normal.
The summer season rice crop accounts for about 85 percent of total output.
Gujarat and Maharashtra are important for cotton and oilseeds, and Maharashtra also has the biggest output of sugar in India, the world's second-largest producer behind Brazil and the top consumer.
Last week, rains were 42 percent below normal in Gujarat and down 31-34 percent in Maharashtra overall. Rainfall after planting dictates the yield of sugar from the cane.
Poor harvests can push up prices of foods and spur inflation, which at over 9 percent is already worrying the government and central bank.
The coalition government also plans to expand provision of subsidised food among the 1.2 billion population, 42 percent of whom live in poverty, and has sat on exports of crops while it waits for this bill to go through parliament.
NO NEED TO PANIC
The latest data suggests more land has so far been planted with rice, soybean and cane than last year, with a further update expected on Friday.
Acreage under pulses, cereals and cotton is down on last year but only slightly in the season up until July 22.
"There is no need to press the panic button right now, as how the monsoon finally shapes up over the main crop regions will fix the fate of overall farm output," Rathore said.
At the same time, India has huge stocks of rice, enough to persuade the government to allow 1 million tonnes of exports -- a little under 1 percent of output.
New Delhi has also given the go-ahead for 1 million tonnes of sugar exports in 2010/11 but will wait until September to decide on any more. By then, a clearer picture should emerge of cane output and the festival season -- when Indians traditionally consume more sweets -- will already be underway. \
Indians eat about 22 million tonnes of sugar every year and the country is expected to produce about 24 million tonnes in the year ending September 2011 and more again in 2011/12.
Cash crops such as cotton could also be affected by lack of rains, with India's supply seen key for the market in 2011/12, in the view of the world's top cotton merchant.
"Cotton needs rains at regular intervals after planting gets over for healthy growth," said D. K. Nair, secretary general of the New Delhi-based trade body Confederation of Indian Textile Industries.
Last year, rainfall was 38 percent above normal in the week to July 28, after a weak start in June, and ended the four-month season as normal.
A normal monsoon means India receives rainfall between 96-104 percent of a 50-year average of 89 centimetres.
The weather office's overall forecast, made around a month ago, expected the rains to be slightly below normal for the entire June to September season.
(Additional reporting by Mayank Bhardwaj; Editing by Jo Winterbottom and Jane Baird)
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