Chana prices stay above MSP as farmers hold on to produce

After subdued for some, chana (gram) price has managed to stay above minimum support price of Rs 4,000 in wholesale spot markets.

Though, the rise is seen in past one month is not causing panic, unlike many pulses specially Tur, chana is not in that bad position so far as farmers returns are concerned. However, looking projection of Chana production in 2016-17 at over 9 million tonnes, the firming up is cheerful for farmers.

Traders give two reasons for this.

First is the actual crop size is likely to be lower than the Government estimate of 9.08 million tonnes according to the third advanced estimate and secondly farmers and some traders holding chana stock purchased when prices were quite high are holding on in anticipation of a rise in prices in the peak inflation months of June to September. Chana is one of India’s biggest pulses and is primarily cultivated during the rabi season.

Though, for the farmers who have been facing a trying time since the last few months due to bumper harvest and sharply falling open market prices, the slight recovery could come as a good news.

Some traders said uncertainty over the 2017 southwest monsoon is also keeping prices firm.

According to Agmark data, average spot market price of chana in the country has been around Rs 4,000-per quintal in February — March but went started slowing improving from April.

“Prices have only marginally recovered from the low made recently. Overall arrival not strong and farmers are holding back Chana to sell later as they expect higher prices. Pipeline inventory was at historic low so whatever production increases has also gone to fill this pipeline inventory. This price recovery is sustainable. There will be volatility both sides and we expect prices to firm up July-Oct time frame as that is strong demand period,” Pravin Dongre- Chairman of India Pulses and Grains Association (IPGA) told Business Standard.

IPGA expects chana crop to be higher than last year, but nowhere close to record production which the government is talking about.

Anuj Gupta, Head of research, commodities and currencies, Angel commodities said, “Chana prices are moving up in last few days in physical market due to expectation of normal monsoon. When price was traded lower than MSP, farmers were not willing to sell below MSP hence there was lower supply in physical market taking prices higher. Many traders are holding the chana at higher levels from last year’s crop and not ready to sale it now at prices are lower.