Chana prices expected to rise 10% in two months

Chana (gram) prices are likely to rise 10 per cent in two months on lower acreage and crop damages due to unseasonal rain in major growing states. Food Minister Ram Vilas Paswan's assertion of levying import duty to restrict overseas supplies and allow pulses exports might also support chana's upward march.

"Certainly, chana will touch Rs 4,000 a quintal-mark once arrivals of new season crop stabilises and crop size is finally known. But, looking at lower estimated production based on a steep decline in sowing area, chana will remain firm for entire this year," said Ajay Kedia, managing director of Kedia Commodities.

Since January this year, chana price fell by 5 per cent to trade currently at Rs 3,537 a quintal for delivery in April on the National Commodity & Derivatives Exchange (NCDEX).

Chana kept trading below its 2013-14 minimum support price of Rs 3,100 a quintal for the most part of the year. A record production in 2013, higher imports at lower rates (due to a weak dollar versus rupee) early on in 2014 kept stocks at high levels in the markets. A delayed arrival of the monsoon in 2014 did support the market sentiments to some extent. But continuous actions by the government on hoarders prevented prices from shooting up. Regular fall in petrol/diesel prices along with good production in some of the international markets too kept trend weak.

"Farmers did not get remunerative price last year, which resulted into lower acreage this year. An independent survey done recently reports 15-20 per cent decline in output this year, which will support price's firmness. While chana price will remain range-bound to lower in near term due to arrivals of new season crops, prices will certainly go up in some time," said Bimal Kothari, managing director of Pancham International and vice-chairman of India Pulses and Grain Merchants' Association.

According to Kedia, rainfall during mid-January is estimated to have damaged at least 4-5 per cent of crops in Rajasthan in addition to other parts of the country, especially Madhya Pradesh. But, actual damage might go up to 8-9 per cent as harvesting progresses. More than standing crops, rainfall damaged matured crops.

Paswan on December 30 said his ministry has recommended the ministry of commerce to levy 10 per cent import duty on pulses to protect the interest of local farmers from falling prices. In the last one year, pulses prices remained subdued with occasionally falling below the minimum support price (MSP) of Rs 3,100 a quintal fixed by the government. Also, the minister recommended to allow exports of pulses which has been banned for several years.

As per the ministry of agriculture, rabi pulses 2014-15 coverage till February 6 reported a decline of 9.30 per cent to 14.29 million he as against 15.76 million he around the same time last year. The area under chana cultivation reported a sharp decline of 15.10 per cent to 8.53 million he this year as against 10.05 million he by same time last year.

In 2014, prices found very strong support at 2,500-2,600 levels. Prices continuously bounced back from those levels. On the upper side, 3,500-3,600 levels were not breached for quite some time. However, lower sowing, increasing domestic demand, rising demand from stockists and firmness in International markets could keep the uptrend intact for the commodity till new crop arrives from March, said Ajitesh Mullick, assistant vice-president (retail research), Religare Broking.