Correction imminent in urad prices, chana soars on festive fizz

WEEKLY COMMODITIES OUTLOOK

Urad (Black Matpe): At current levels of Rs 2,500, per 100 kg, (on the NCDEX November contract), a minor correction is imminent before urad prices cross the psychological level of Rs 2,600 per 100 kg, said the analysts.

"NCDEX Nov contract is likely to end the week at Rs 2,650 levels," said a senior analyst with IL&FS Investsmart Commodities.

The rally is likely to continue owing to slow arrivals from Maharashtra's key areas such as Latur, Akola, Udgir and Jalgaon. According to the traders, arrivals are 50 per cent down in comparison with last year and the late rains have also affected the crop quality. Also, following rising international prices, imported cargoes are selling at a premium.

Although there is a surge in the prices in the short term, there might be a downtrend in about 4-8 weeks on arrivals of new crop from Uttar Pradesh, Madhya Pradesh and imports of old Burmese crop.

Chana (Chick Pea): Festive buying is expected to keep prices up though stockists too are keen to offload stock ahead of festival. Further, sowing of chana in MP begins November and farmers too will buy it for seeding purposes.

Market, however, is suspecting that arrivals from Pakistan will be affected around this time following the damage caused by the earthquake. However, there has not been any cancellation of consignments till now. India relies on imports to feed bulk of its demand.

According to a Dubai-based top international importer cum exporter, overseas kabuli chickpea markets remain strong against limited availability from Mexico, United States, Canada, Iran and Turkey.

While Canada's harvest continues to push forward, there is a suspicion on the quality of most October harvest owing to rains, frost, and an attempt to regrow. This has left the processors and exporters doubtful about crop estimates. Further, the quality is such that a larger than initially expected fraction of the crop may be diverted to livestock feed markets.

NCDEX November contract is likely to touch Rs 1,965 and then move ahead to Rs 2,000 per 100 kg by the end of the week. Market players feel a lower opening of the January contract (on Oct 21) will define the extent of rise. The contract today traded at Rs 1,949.

Gold: The glitter is likely to sustain this festive season with the yellow metals seen moving up for the seven consecutive weeks, despite closing lower last week.

Physical demand as well as the rising inflation risk are seen supporting the upward movement at lower levels. "However, the continued build up in speculative long positions make the gold prices heavy on the top," said a daily note by Karvy Commodities.

According to CFTC's commitment of traders report, the speculative net long positions stand at a record high of 0.177 million contracts. Traders, however, do not expect a major fall before December.

At 1625 IST, overseas spot gold traded at $471.05 an ounce, down from $477 a week back.