Barley prices set for a crash on arrivals

Galloping barley futures would be reined in once the new crop hits the market in a fortnight. With an estimated increase in output this season and a likely poor demand from overseas market, commodity analysts expect the prices to slip below Rs 900 a quintal, a fall of over 15 per cent from the current prices.

For the last eight trading sessions, barley futures on the National Commodity and Derivatives Exchange (NCDEX) have been ruling over Rs 1,000 a quintal. It is mainly on the back of speculative trading as availability in the physical market is nil across the country.

Abhishek Goel, a Jaipur-based barley trader, said, "Crop size is around 10-15 per cent more this year. New crop will arrive by mid-March and will pick up momentum by the first week of April, thereby pushing down the rates." According to market estimates, crop size could reach close to 1.6 million tonnes against last year's 1.3 million tonnes.

However, quality of the crop may be of poor quality as the crop received scanty rainfall and suffered from cold foggy weather.

Mumbai-based barley experts said that demand from the overseas market, mainly the West Asia, was expected to be lull as importing countries would turn to Ukraine "" their traditional source of barley.

Confirming this, Rajasthan-based traders (largest producing state of barley) said that Ukraine had lifted the ban and had opened its stock of 1.6 million tonnes for export. This could lead to a crash in Indian market.

Ukraine banned barley exports last year, forcing importers to look towards Indian. This resulted in prices crossing Rs 1,300 a quintal.

"So far no export inquiries have been made for the commodity. As the crop in Ukraine is of better quality, we expect overseas demand to be less," said commodity analysts.

Major procurement will be around April-May from stockists in Rajasthan and Gurgaon. Analysts said in such a situation, domestic demand may not be able to sustain barley at higher levels. Prices of maize are also likely to impact barley market. As long as maize rates remain below Rs 800 a quintal, demand from the poultry and animal industry will also remain low.

The April contract for barley on NCDEX closed on Tuesday at Rs 1,066 a quintal against the previous close of Rs 1,071.