Weak Indian Monsoon Dries Up Centrally-Planned Liquidity Expectations

Drought has devastated crops around the world this year. While most have focused on the extreme issues in the US, we noted two weeks ago that the Monsoon season was shaping up to add fuel to the fire of illiquidity. As the NY Times reports, there is simply not enough rain in India as the annual monsoon season is down 12%. "If this situation continues, I'll lose everything" is how one soybean farmer highlighted his plight (and no government insurance or subsidies there).

This is India's fourth drought in 12 years - raising concerns at the country's reliability monsoon rains as it source of fresh water (and sustainability) as "nothing can happen without rain." India is more vulnerable to disruption from drought than the US. While agriculture accounts for just 15% of India’s economy, half of its 1.2 billion people work on farms, and many of its poorest citizens already cannot afford enough food after price increases of 10% or more in the last couple of years.

UN Food Price Index rose the most in July in three years...


Famine is not an immediate threat though as India has stockpiles of food (though we know the issue there) but critically this, as we noted here before, places inordinate pressure on central bankers (specifically the PBoC) where its citizens are already facing record high prices for staples like soybeans as the world's markets (devoid of contemplation of the plight of the average citizen - so long as my AAPL stock goes up) anticipate the free-lunch of central bank liquidity while its that non-metaphorical liquidity that could ease pressures on millions.