Stock limit blues dent chana

The festive season has so far failed to raise the demand for chana in the physical market, pulling down the prices of the pulse in the futures market.

The Delhi government's stock limits on pulses and wheat have added to the bearish trend, sending the prices downward.

The Delhi government issued a notification on Wednesday, capping the pulses stocks for wholesalers at 200 tonne and 5 tonne for retailers.

According to the notification, traders will have to apply for trading licences. After Maharashtra, Delhi is the second state to put stock limits on pulses.

The prices of near-month chana contracts on National Commodity and Derivatives Exchange (NCDEX) slipped by 4.5 per cent from Rs 3,222 a quintal last week to Rs 3,073 a quintal on Wednesday.

On Wednesday, the prices fell by Rs 85 a quintal. In the case of November and December contracts, the prices fell by Rs 37 and Rs 31 a quintal respectively.

Until last week, chana futures were trading at relatively higher levels. The markets were anticipating stock limits by states for more than a week.

The bearish trend began when markets opened on Monday. The week began with a fall in prices of more than Rs 70 a quintal each for all the three futures contracts (October, November and December).

Meanwhile, the spot prices of chana in Delhi closed on Wednesday on the NCDEX at Rs 3,062, down by Rs 64 a quintal against Tuesday's closing price of Rs 3,124 a quintal.

Analysts believe such stock limits will trigger a short-term price correction. However, prices will firm up on the back of strong fundamentals, they said, pointing out that the shortage of chana is around 8 lakh tonne, with the new crop not expected before February. 

Correction
Our report published on October 12 (Stock limit blues dent chana) had wrongly stated that the Delhi government had issued a notification capping the pulses stocks for wholesellers and retailers. No such notification has so far been issued. We regret the error.