Agri commodity marts volatile

MARKET OUTLOOK

Prices of agricultural commodities are likely to remain volatile in the weeks ahead, if the polled prices of the two leading commodity exchanges and a substantial rise in acreage are any indication.

The agri spot and futures indices, the parameters to measure price movement in the spot and futures markets respectively, slumped on the National Commodity and Derivatives Exchange (NCDEX) on Friday. The spot index of the NCDEX closed weak on Friday at 1,438.39 points from 1,449.82 points a week ago and 1,483.50 points a month ago.

Similarly, the NCDEX agri futures index fell on Friday to close at 1,440.67 points as against 1,450.04 points a week ago and 1,487.58 points a month ago.

In contrast, prices polled by the Multi Commodity Exchange (MCX) indicate a rising trend. Similarly, the agri spot index on the MCX shot up to 1,743.73 points one Friday from 1,736.92 points a week ago and 1,721.17 points a month ago.

Agri commodity prices, including those of foodgrains, cereals, spices and oilseeds, have not gone up dramatically in the recent past because of the government's timely intervention. Foodgrain prices especially remained steady, with minor variations of Rs 25-50 a quintal in the domestic market.

"Chances are that prices of foodgrains will remain rangebound in the futures market as well. The higher rice output estimated this year will be compensated by a rising export commitment, hence negating the impact on prices," said Sharad Maru, president, Grain Rice and Oilseed Merchants Association (GROMA).

Rice exports are likely to double to 9 million tonnes this year as against 4.4 million tonnes last year. The country's total rice production is estimated to go up by 10-15 per cent from the last year's output of 91 million tonnes.

Tightness in wheat supply may be eased with more imports and distribution of the grain at subsidised rates. But the next four months would still remain crucial till the new crop hits the market in late January.

The high acreage in most of the agri commodities this year is projected to ease the market sentiment, nullifying any potential for a price rise. According to data compiled by the ministry of agriculture, as on August 23, the acreage of pulses jumped by 7 per cent to 112.85 lakh hectares in comparison to 105.05 lakh hectares last year. The normal pulses acreage is around 108.71 lakh hectares.

The oilseeds area under cultivation has also gone up to 167.93 lakh hectares compared with 155.41 lakh hectares last year. The normal acreage of oilseeds is around 155.69 lakh hectares.