Agri prices lose steam

Since June 22, when the Union Cabinet cleared duty-free imports of wheat and sugar, and banned export of pulses, the spot and futures prices of all the three have fallen.

While wheat futures for July has gone down to Rs 830 from Rs 879.80, August futures have slipped to Rs 852 from 903.40 in the same period.

Although the decline in price is lower in spot compared to futures, traders are apprehensive of a further fall in the days ahead. Spot wheat closed at Rs 843.10 as against Rs 865.50 on June 21, according to prices put out by National Commodity & Derivatives Exchange.

Sugar M was the biggest loser with a fall of Rs 26 during this period. The hardest impact of the government's decision was seen in the spot market price of sugar where the loss of Rs 100 at Rs 1750 was wider than that in the futures market.

Chana futures for July lost about 20 per cent to Rs 2,179 from Rs 2,621 while spot chana managed to limit its loss to 12 per cent only to Rs 2,145 from Rs 2,453.

Lemon tur July futures lost about 8 per cent to Rs 1,584 from Rs 1,723. In the spot Mumbai trade, lemon tur lost about 7 per cent to Rs 1,578 from Rs 1,702 on 21st.

Following the path of other pulses, urad for July slumped by 6 per cent to Rs 2,775 from Rs 2,965. In the spot market, the widely consumed pulses managed to restrict the loss up to 3 per cent.

According to an analyst with Kotak Commodities, the prices of chana, tur and urad would remain subdued for a few days.

However, the price of chana is expected to pick up in the next 15 days due to the demand for festivals from August. The exports of tur and urad are very minimal. It was only due to the panic selling of chana that their price witnessed a fall.

"We can expect the prices to firm up in another 15 days, again on account of the festive season demand." he said.

The government has not announced extension of current quota sale nor fresh quota of sugar for the quarter ahead.

The market anticipates 45 lakh tonne of quota sugar for the quarter ending September as against 42 lakh tonne allotted for the quarter ending June. Through quarterly quota, the government directs sugar mills to relase sugar in the open market.

"The higher quota coupled with low buying due to the rainy season and the absence of any festival this quarter forced stockists to offload the existing stocks," said Rajendra Shah of Hitendra Kumar Takarshi & Company, a Vashi-based sugar trader.

Heavy selling is also seen in other commodities like pulses, cereals etc. However, Shah is hopeful of a complete reversal in the price trend in the long term because of supply shortage.

A trader blamed multinational outfits for ramping up the traditional trade practices in the commodities by offering higher price to the farmers than the current prevailing prices in the open market. This creates an artificial price rise of grains, the pointed out.