Chana futures may fall on low demand in spot mart

Chana futures on the National Commodity and Derivatives Exchange are seen marginally weak in the coming week due to low demand in spot markets and high delivery expectations in the August contract, analysts said.

"Daily demand this year in the Bikaner mandi is around 3,000-4,000 bags (1 bag = 95-100 kg) compared with 10,000 bags last year due to less festivities and marriages in the last few weeks," said Vinod Sethia, a Bikaner-based trader. He expects spot prices to move up by Rs 50 per 100 kg, over the current price of Rs 2,200. "Demand is sluggish in Delhi at present. However, by August 15-20, we can expect an improvement in demand, ahead of the festival season," said Ashok Gupta, a Delhi-based trader. He sees a marginal fall of Rs 15-20 in spot prices in the next week.

Delhi spot prices were at Rs 2,300 per 100 kg today, down Rs 10-15 from Saturday.

Arrivals in Delhi's Lawrence market were steady at 15-20 trucks (1 truck= 15-20 tonnes).

Also, chana inventories, though declining, are still high at around 36,000 tonnes in NCDEX-accredited warehouses. Out of these, 14,914 tonnes of chana at Bikaner will become invalid for delivery on September 5. Hence, this quantity is expected to be delivered through the August contract.

Due to this, pressure from these stocks will keep prices down until expiry, analysts said.

"However, with the festival season expected in the coming weeks, demand is likely to improve. Hence, buying on a fall of Rs 25-30 rupees is advisable in the coming week," said a dealer with Anand Rathi Commodities. He expects the August contract to fall to Rs 2,180 rupees per 100 kg before expiry on August 20.

"Prices will be under pressure till the expiry of the August contract. However, a recovery is likely to be seen after expiry of the contract due to expectations of good demand from August-end," said Chowda Reddy, analyst at Karvy Comtrade.

Technically, the September contract is expected to find support at Rs 2,260 per 100 kg and resistance at Rs 2,300 during the week.

"On breaching of the support level, prices are seen falling further to Rs 2,200," said Reddy.

On the NCDEX, chana: - August was at Rs 2,220 per 100 kg, down Rs 15 from Saturday's close; - September was at Rs 2,287, down Rs 16.