Discounts shrink in chana futures

The government's decision to permit states to impose stock limits on commodities stored in warehouses registered with the Warehouse Development and Regulatory Authority (WDRA) has started impacting futures prices, especially that of chana.

A fortnight ago, chana was quoted at a discount of Rs 190-200 a quintal in New Delhi delivery on the National Commodity and Derivatives Exchange (NCDEX).

However, the discount has narrowed to Rs 30-40. Ajay Kedia, director at Kedia Commodities, said, "While the fundamentals for chana have favoured bulls and prices have been going up in the spot market, resulting in higher futures prices, traders have started taking their stock out from WDRA-registered warehouses, which was otherwise was acting as a threat for futures as that can be offloaded on exchanges if prices rise sharply. That threat of delivery is now evasive, which has resulted in futures prices rising faster than spot."

A few days ago, the Union Cabinet had decided to extend stock limits on essential commodities such as oilseeds and pulses for a year and permitted states to impose stock limits on WDRA-registered warehouses. Stocks stored in such warehouses can only be delivered on futures exchanges.