Chana prices may rise marginally on festival demand

Chana futures on National Commodity and Derivatives Exchange (NCDEX) are seen marginally up due to the much awaited festival demand from west and north Indian regions, analysts and traders said.

"There are signs of emergence of demand from dal mills, particularly from western India," said Yogengra Singh, an analyst at Religare Commodities. The most-active September contract on NCDEX is likely to touch Rs 2,410-2,440 per 100 kg in next six-seven days, said Singh. However, the contract could dip to Rs 2,320 from current level of Rs 2,360 on mild profit booking, he said.

Spot prices are likely to remain firm despite likely profit booking in futures market owing to festival demand from dal and flour mills, said Ashok Tomar, a Bikaner-based pulses broker.

Today, spot chana in Delhi surged Rs 30 to Rs 2,350 per 100 kg, while in Bikaner, it was trading at Rs 2,270, up Rs 40 from Saturday.

"I expect spot chana to rise another Rs 60-65 to Rs 2,340-2,350 per 100 kg in a week," said Tomar. In Delhi, spot chana is expected to touch Rs 2,400 per 100 kg in 4-5 days, on clear signs of festival demand, said Rajesh Garg, a local chana trader. According to Garg, there could be a fall in prices in the short-term as a substantial quantity of chana from warehouses in Delhi's green belt may be offloaded in the spot.

The Supreme Court has ordered all buildings constructed in Delhi's green belt to be sealed by September. "However, a robust festival demand can absorb excess stock from these warehouses," Garg added.

But in the medium-to-long term, the move could benefit chana prices as it will reduce warehousing capacity, he said.

A steady decline of 3,000 tonnes in chana stocks at NCDEX-accredited warehouses since August 1, has eased pressure of very high deliveries.

As on Friday, total chana stocks in NCDEX warehouses were nearly 30,300 tonnes.

While chana stocks that will become invalid for delivery after September 5 have declined by over 4,700 tonnes in the last three-four weeks, but are still high at over 17,000 tonnes. Any major fall in these stocks in the next few days due to Rs 60-70 premium in spot market, will lead to rise in futures prices.

"Hence, buying on every dip will be a good strategy in chana futures," according to an analyst at Karvy Comtrade.

According to a technical analyst at Karvy Comtrade, the contract can be bought at around Rs 2,290-2,310 per 100 kg with a target of Rs 2,400-2,430.

He said prices may improve in the coming days as the commodity enters its peak demand season from August third-week to September.