Chana futures static on weak demand

Chana prices in the domestic futures market have so far seen a rangebound movement this week on the back of falling demand as well as prices in the spot market.

Analysts said they expected the week to end on a softer note, adding "the rally will return next week with the advent of another leg of the festive season".

Last week, chana futures contracts of the next three months on National Commodity and Derivatives Exchange (NCDEX) scaled above the Rs 3,270 a quintal level. The November futures contract stood at Rs 3,291.

This week the futures market opened much weaker with the October and November contracts slumping by over Rs 25 each, and the December contract plunging by Rs 44. However, the October and November futures today closed at higher levels Rs 3,235 and Rs 3,263 a quintal, respectively.

"Prices were at relatively higher levels last week. The persistence of the uncertainty over chana demand is resulting in a rangebound movement in the chana futures," a Mumbai-based commodity analyst said.

"There is hardly any demand in the physical market this week, and it is taking its toll on futures as well. We expect this week to see a rangebound price trend and end somewhere between Rs 3,200 and Rs 3,250 a quintal," Akshita Bhatt of Kotak Commodity said. However, she added, the next week could see a jump in the Rs 100 range and breach the Rs 3,300 a quintal mark.

In the spot market, the chana price in Delhi, on NCDEX, fell by Rs 22 to Rs 3,214 a quintal. In Bikaner, prices slipped by Rs 20 to Rs 3,165 a quintal.

"There is no demand in the spot market and so, the prices have gone down," Dipak Shah, a Indore-based trader, said.

In the Indore market, today, chana was quoted at Rs 3,110 a quintal.

The country produces 36-38 lakh tonne chana a year, while its total consumption stands at a much higher level of 50 lakh tonne. So, the rest of the demand of 12-14 lakh tonne is met through imports, particularly from Australia.

Market sources estimate a shortage of 4 lakh tonne this year. With the next crop expected only in February 2007, prices are expected to remain firm in the coming months.