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High price of gold has forced consumers to refrain from fresh orders leading to a 38% slump in India’s gold demand in the June 2009 quarter. Global jewellery demand in that quarter has slipped 22% to 404.1 tonnes taking the overall consumption to 569.7 tonnes, 14% lower than in the June 2008 quarter. In the 12 months till June 2009, bank deposits grew 22% year-on-year which suggests that consumers have preferred to stay invested in cash because of the global economic downturn and volatility in gold price.
Monsoon, the main source for irrigation for the country’s 235 million farmers, may be on the lower end of the forecast. Rainfall in the June-September season will be 93% of the long-period average of 89 centimetres (35 inches). Rain in July, the wettest month in the June-to-September monsoon season, was 98% of the long-period mean, or more than forecast. That wasn’t enough to make up for the 52% shortfall in June.
Despite bearish prospects in the medium to long term, edible oils such as soya and palm have rallied over the past few days on cues from overseas exchanges. Price support came from Chinese demand and an increase in crude oil prices. Edible oils are diverted for making bio diesel when the price of crude goes up.
India exported over 20% less coffee so far this calender year at about 1.18 lakh tonnes, compared to 1.48 lakh tonnes last year. Export orders suffered due to higher prices of the Indian coffee, compared with that of Vietnam, Brazil and the US. Indian coffee is quoting 10-15% higher than that of Vietnam and the US in the global market. Export of instant coffee fell to 17,646 tonnes from 23,751 tonnes in the previous year.
Sugar price has hit a 28-year high on the international market (ICE). One of the reasons is India’s deficient monsoon. Production in India is projected to fall to 15-17 million tonnes in 2009-10 from the initial forecast of 20 million tonnes. Paradoxially, what has made things worse is excess rainfall in Brazil which is the world’s largest sugar producer. Indian prices have also risen in anticipation of a surge in demand during the coming festive season and fears that the government will impose import restrictions to curb prices.