Urad February contract settles lower

The February contract of urad on Monday settled lower at Rs 2891.40 against its previous close of Rs 2971 a quintal amid high volatility on the National Commodity and Derivatives Exchange (NCDEX).

The final settlement price (FSP) is based on Monday's average polled price. Last month, NCDEX changed the norm to curb excessive volatility and arrived at the ESP on the polled price of last five days but subsequently it restored the old practice following the intervention of the Forward Markets Commission.

A section of the market said the price would remain firm owing to bad climate in Myanmar (Burma) that could damage the crop and adversely impact the supply throughout the year.

Although the exact nature of the damage has not been estimated by the Burmese government as yet, traders are expecting about 30 per cent crop damage in Burma. The price of Burmese urad might rise in near term "" throughout February "" and ease thereafter, a Mumbai-based trader said.

The movement in urad price is triggered by speculations on the current wet weather conditions in Myanmar that might hamper the availability of urad in the country, especially the futures grade.

The continuation of scattered rainfall may hit the crop's output badly resulting in overbuying by optimist traders.

The urad settlement price is about 18 per cent lower than the price that was quoted on February 1. Earlier, urad price for February contract had crossed the resistance of Rs 3,000 before the settlement date and closed at Rs 3,017 on February 16.

The open interest also substantially came down towards the end of the settlement time due to certainty of non-delivery.

The Burmese urad on commodities exchanges are traded in millions of tonne but actual imports amount only to 2.5 lakh tonne, resulting thereby in price fluctuations.

India produces about 12 lakh tonne of urad, which have neither been accepted as delivery in case of non-availability of Burmese urad nor are their any futures trade for them.

This means, despite huge availability of urad of domestic origin, the entire trades are dependent on climatic condition as well as production and availability in Myanmar.