Low output estimate pushes chana up

Lower crop estimates for 2007-08 and slow arrivals in mandis across the country have stoked bullish sentiments in the chana futures. Analysts said that rally was expected to continue and in the next fortnight, the prices could touch Rs 3,000 a quintal.

The revised estimate puts the output below 5 million tonnes, a drop of over 10 per cent than the earlier projection of 5.5-5.6 million tonnes. 

State-wise crop estimate for 2008
State	Output
Madhya Pradesh	1.9-2.0
Rajasthan	0.7-0.8
Maharashtra	0.5-0.6
Karnataka	0.4-0.5
Uttar Pradesh	0.2-0.3
Andhra Pradesh	0.4-0.5
Others	0.2-0.3
Market sources           (In million tonnes)

According to commodity analysts at Angel Commodities, arrival in Madhya Pradesh was still not in full swing. "Another reason for the bull run in the chana market is the overall strong sentiments across the agri commodities sector," they said.

Suresh Agarwal, chairman of Madhya Pradesh Dal Udyog Mahasangh, said, "We expect a drop of 20 per cent in crop from the state. Though arrivals have begun, farmers are holding a large part of their crop hoping for a further rise in prices. They may enter the mandis next fortnight."

At present, the daily arrivals in the state are to the tune of 100,000 bags (each of a quintal).

Madhya Pradesh, the largest producer of chana in the country, is expecting an output of less than 2 million tonnes against the average 2.4 million tonnes.

Other growing states including Rajashthan, Maharashtra, Andhra Pradesh, Karnataka and Uttar Pradesh are also likely to produce less crop this season.

Crop from Rajasthan is expected to hit the market by the end of March. "The country's total output will be between 4.7 million tonnes and 5 million tonnes," said market sources.

According to Agarwal, speculators are playing vital role in the chana market. "The crop size is less, but not less enough to support such high level of prices. The prices should have been around Rs 2,500 a quintal and certainly not more than this," he said.

On the National Commodities and Derivatives Exchange (NCDEX), the near-month contract of chana closed the day at Rs 2,790 a quintal, up Rs 108 a quintal from the last week's close of Rs 2,682 a quintal.