Supply glut pulls down urad prices 4 per cent

Urad prices slumped by 4 per cent closing at Rs 3,769 a quintal on Friday compared with Rs 3,903 a quintal in the beginning of the week as a result of glut in supply.

The prices had shot up before Diwali on anticipated festive demand and supply disruption from major trading centres because of holidays. Arrivals in the markets had halved before Diwali holidays to approximately 3,000 tonne.

On Friday, with most traders returning to the markets from long holidays, urad arrivals amounted to around 6,000 tonne.

"The prices may go further down by 5 to 7 per cent next week, when trading begins in full swing," a Jalgaon-based trader said.

On Friday, urad futures for November delivery on the MCX declined by 3 per cent at Rs 3,633 a quintal from Rs 3,753 on Monday.

The prices of December contracts witnessed a slump of 6 per cent to end the session at Rs 3,633 a quintal from Rs 3,841) on Monday. On a weekly basis, the prices of November contracts declined by about 5 per cent. On the NCDEX, the prices of November contracts dropped by Rs 55 to close at Rs 3,725 a quintal.

Diwali demand, which started 10 days ago, continued till the end of the last week, which was very good for stockists and retailers. The prices were already bullish in anticipation of Delhi and Madhya Pradesh following Maharashtra in imposing the stock limits on pulses, a trader said.

Besides, non-availability of imported urad was also partly responsible for the prices to rise. But, with local traders resuming supply and with no stock limit imposition, traders are free to build stocks as per their comfort levels, the trader added.

Maharashtra is set to record a bumper crop this year, despite about 50 per cent of the crop damaged by unseasonal rains. Frequent rains at the time of flowering and ripening of the crop had damaged the quality of urad immensely.

But, a section of traders said there is no loss of production as a result of unseasonal rains, but the quality of urad has deteriorated.

Maharashtra contributes about 20 per cent to the urad production of the country. According to industry estimates, India's total urad production is expected to remain rangebound at around 11 lakh tonne.

"Urad prices are mainly influenced by traders in Jalgaon. When the price was ruling at around Rs 3,200 a quintal, Jalgaon-based traders bought aggressively, lifting the prices dramatically to the level of Rs 3,700 a quintal. Traders are now awaiting a substantial decline in urad prices," said an analyst at agriwatch.com, a commodity portal in Delhi.