Higher production to pound chana, urad

MARKET OUTLOOK

High productivity despite low per-hectare yield is likely to knock down chana and urad prices by around 25 per cent in the coming months, while scarcity "� after rain lashed out the crop at the time of flowering "� will keep tur firm.

If the spot polled price on the National Commodity & Derivatives Exchange (Ncdex) is any indication, chana prices fell 9.16 per cent to Rs 2,459 a quintal on Friday, from Rs 2,707 on February 1.

In fact, for chana, the expectation of around 20 per cent higher output this year (industry projects 55 lakh tonne against 45 lakh tonne last year) has already been discounted.

The arbitrage between February and March futures in chana on the Ncdex differ by a negative 15 per cent with the contract for delivery in the former month priced higher at Rs 2,431 a quintal and the same for the latter month delivery quoted lower at Rs 2,087.

The April contract declines further to Rs 2,025 a quintal. The May, June and July contracts are slightly better off than the April contract at Rs 2,055, Rs 2,097 and Rs 2,143 a quintal respectively.

This indicates that the spot markets are currently tight owing to low arrivals despite scattered harvesting began in small areas. Traders say prices would ease once arrivals from Madhya Pradesh begin next month.

A Jalgaon-based trader said arrivals from Rajasthan, expected in April, are likely to hurt the present bullishness and push down the spot prices to a low of Rs 1,800 a quintal against the current price of Rs 2,400. On the back of higher prices last year, the chana acreage increased about 5.5 per cent to 78.8 lakh hectare this year.

But this is expected to be slightly offset by lower yield (likely to go down slightly to 795 kg a hectare against 805 kg a hectare last year), though overall production will still be on the higher side.

Experts believe the pace at which consumption of pulses is growing, which can be met only through high yields, calls for most modern technology since conventional methods of sowing, irrigating, plant care and harvesting are no longer to fetch adequate returns on investment.

The country imports about 2 lakh tonne chana from Canada, Australia and Tanzania to meet the growing demand.

A local trader says tur prices will rise up to Rs 4,000 a quintal towards the end of this pulses season from the current level of Rs 3,000 a quintal. He expects urad prices to decline by at least 20 per cent when the new crop hits the market, probably by next month. The commodity, currently quoting at Rs 3,100, is targeted to slump to Rs 2,500 a quintal in the months ahead.

The country is set for a fair urad crop this year.

Pegged at around 13-15 lakh tonne (about 13 lakh tonne consumed), the crop accounts for 10 per cent of the total pulses output of 120-150 lakh tonne. The country imports about 2 lakh tonne of the pulse variety, mainly from Myanmar.