Chana looks range-bound amid volatile trade

Chana futures on the National Commodity and Derivatives Exchange are expected to remain sideways amid volatile trade as spot demand holds the key for further direction, analysts and traders said.

Bullish fundamental factors such as a likely fall in output, irregular arrivals, possibility of rains in key growing areas of Madhya Pradesh and Rajasthan are likely to take a breather for a short while, as prices have already reacted, albeit in a hurry, to these factors, they said.

These factors have already led to a near 25 per cent rise in chana prices in the last two months. Currently, spot demand is virtually at standstill and millers are rarely buying just to fulfil their immediate requirement, traders said.

"Demand for chana dal is almost nil and at current prices, it is unlikely to revive," said Ashok Gupta, a mill-owner in Delhi, said.

Its not feasible for millers to sell dal at current prices of Rs 3,050 a quintal, Gupta said.

Spot chana in Delhi is around Rs 2,750 and ex-mill cost for chana dal is at Rs 3,100 after processing, which results in Rs 50 a quintal loss, Gupta added.

"Even stockists are unwilling to buy the commodity until spot prices dip by another Rs 100 a quintal across all the major markets," said an Akola-based pulses broker.

Also arrivals are likely to gather momentum in the coming days, which could further pressurise spot as well as futures market.

"Chana arrivals from Gujarat to millers in Delhi is in full swing and Madhya Pradesh crop will also pick up soon," Gupta added.

Arrivals in Indore are below expectation but the same at Vidisha, another major market in Madhya Pradesh, have gone up substantially in the past couple of days, said an analyst at Mumbai-based brokerage.

"Vidisha market is witnessing chana arrivals in excess of 5,000 bags (of 100 kg each) for the past couple of days," the analyst said.

Futures
"Barring speculative activity, the present demand-supply scenario is likely to keep futures prices at current level with minor downside," Gupta said.

However, technically, futures are currently seen bottoming out in the short term, a technical analyst at Mumbai said.

"April chana on NCDEX has an immediate support of Rs 2,850 a quintal, and if it breaches the same, the contract could go down to Rs 2,805," the technical analyst said.

On Thursday, April contract sharply recovered after testing a bottom of Rs 2,859 a quintal.

April chana has thrice broken psychological Rs 3,000 level in the last two weeks, but could not sustain these level.

The contract may see downward journey again after testing this level in the next six-seven sessions, he said.

Warehouse Stocks
Chana stocks at the NCDEX-accredited warehouses have also seen a consistent rise in the past few days as on Wednesday, it was at around 6,000 tonnes compared with 1,000 tonnes a month ago, NCDEX data showed.

Stocks at Indore warehouse alone has gone up to over 4,300 tonnes from around 100 tonnes a month ago.

Rise in stocks may lead to higher deliveries on the exchange platform and higher supply in spot market.