Agriculture Sector Update - Rising Commodity Prices To Maintain Demand Momentum For Agri Inputs: Motilal Oswal
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Motilal Oswal Report
We hosted the management of Coromandel International Ltd. and Godrej Agrovet Ltd., to get their individual perspectives on the inflation in agricultural commodities (as per the World Bank, prices in April 2021 increased 83% YoY for maize, 64% YoY for soybean, 76% YoY for palm oil, 58% YoY for sugar, and 43% YoY for cotton).
Furthermore, we wanted to understand the implication of this inflation – driven by supply-side disruptions, stockpiling, and speculation – on various stakeholders (farmers, corporates, and the economy) as well as the current situation on the ground. Here are the key takeaways:
- As of April 2021, the Food Price Index posted a rise for the 11th consecutive month and was at the highest levels since May 2014. Growth was largely driven by vegetable oils and cereals, lower output and decline in inventory levels, and stockpiling in China.
- Rural consumption slowed in FY21, largely due to a rise in the number of Covid-19 cases in rural areas and consequent lockdowns.
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