Pulses tumble 8% on ban blues

The government's decision of banning futures trade in tur and urad had a ripple effect across the mandis on Wednesday. The spot prices of the banned commodities witnessed a fall of 4 to 8 per cent in the physical market.

Traders with positions in the futures market and those with stocks meant for delivery sold heavily in the spot market after squaring off their futures deals on Tuesday, leading to a decline in prices.

The agri-futures market, as expected, opened on a weaker note, but recovered within an hour after Chairman of the Forward Markets Commission S Sundareshan assured that trading in other commodities would continue as usual.

However, analysts foresee the bearish trend to stay for the time being, with apprehension of a ban on other commodities looming large.

In the Latur market, a leading hub of pulses trade, prices plunged, with tur quoting Rs 2,200 a quintal on Wednesday against the previous day's price of Rs 2,400 a quintal. Similarly, urad declined to Rs 3,450 from Rs 3,600 a quintal whereas Chana slipped by Rs 100 to Rs 2,400 a quintal.

However, in the Delhi market, the physical pulses market remained more or less steady. Chana quoted at Rs 2,600 a quintal whereas tur remained in the range of Rs 2,200-2,300 a quintal.

"Fall in the spot prices of pulses is the immediate reaction to the ban. The prices will be controlled by the fundamentals alone," said a commodity analyst. The country expects a normal crop of chana and urad. In case of tur, there is a crop damage of 20 to 25 per cent.

"Delhi, being a secondary market, has not been affected much. But chances of bearishness in the Delhi market cannot be completely ruled out," the analyst added.

According to a Latur-based trader, the prices may fall further by another Rs 100 a quintal. In Latur, arrivals of tur were between 10,000-12,000 bags and those of urad were in the range of 200-400 bags.

There are reports that farmers did not sell their crop at these lower rates. "It may affect the arrivals, but it will stay for a very short term, as ultimately farmers will have no option but to sell," said a trader.