Pulses prices may drop in Dec-April on low demand

Expectation of high imports and slack demand are likely to keep tur, urad, and chana prices under pressure in spot markets from December to April, analysts and traders said.

In 2008-09 (April-March), total imports are seen increasing to over 3 million tonnes (MT) as against 2.5 MT a year ago on lower Kharif production, which is estimated to be down about 23-27 per cent from 6.8 MT last season, said K C Bhartia, president of Pulses Importers’ Association of India.

India is the world’s largest importer of pulses. It imports tur and urad from Myanmar, while chana is largely purchased from Australia and Tanzania.

“There is a fear of a liquidity crunch triggered by the global financial crisis, due to which traders may offload stocks, thus increasing supply in the market,” said Vandana Bharti, senior research analyst - commodity, SMC Investment Solutions & Services. This is likely to lead to selling pressure in the market amid subdued demand, thus pulling prices down.

Meanwhile, government is planning to promote pulses sowing in rice-growing areas of eastern India that have turned fallow and in rain-fed areas.

Government has increased minimum support price for tur and chana in 2008-09, which in turn has risen to hopes of slightly better rabi production, thereby keeping prices under pressure in the near term, a report by Karvy Comtrade said.

This financial year, government has set MSP of tur at Rs 2,000 a quintal, up 21.2 per cent from 2007-08, while that for urad is at Rs 2,521 a quintal, up 40 per cent.Rabi sowing has gathered pace and farmers have sown pulses over 6.4 million hectares so far, up from 3.9 million a year ago.