Urad futures spurt on crop damage fears

Desi urad futures for the near month contract rose a sharp 25 per cent to end September at Rs 3,409 a quintal level from Rs 2,728 a quintal on September 1.

In the spot market, however, the price of the commodity increased by a lower margin of 12.19 per cent at the end of September from a high of Rs 4,100 achieved early last week.

The current upturn is attributed mainly to the crop loss owing to floods in major urad producing centres. Lower arrivals in mandis too played their role in pushing the prices up.

Traders are anticipating about 25 per cent loss in the crop this year in the leading producing regions, which include Maharashtra, Karnataka, Andhra Pradesh, Gujarat, Rajasthan and Madhya Pradesh, following the heavy rains experienced in the beginning of the flowering season.

"Rains are still on. So, the exact quantification cannot be arrived at now," Bhartiya said. Traders in Jalgaon, who halted their operations amid high price volatility, continue to stay away from their shops as they see no clear government policies.

"We prefer to wait and watch till a clear trend is set in spot as well as futures. Who would risk his venture in a scenario where prices are moving by Rs 100-150 in either direction," a trader said.

Sharad Jain, another trader, however, sees an arrival of 1,200-1,500 bags (of 100 kg each) in Jalgaon as normal "� even compared with the normal streamlined arrival of 2,500 bags in the area. This week, the price of desi urad would go further down by 10 per cent which would again recover next week, Jain said, speaking on the current volatility.

The average daily arrival in Maharashtra market from Uttar Pradesh to the tune of 15,000 bags is quite strong. UP is projected to have a bumper crop of about 2.8 lakh tonne this year.

If the arrivals continue at the same scale, prices would surely see a downturn, a local trader said.

On the other hand, traders are expecting Madhya Pradesh to impose a stock limit on urad, which, if really announced, may result in an offloading of surplus stocks. Any such move by the MP government might put urad prices in downswing, another trader said.

Prices started declining in the last week of the month (beginning September 25) on profit booking in futures by short-term players and hedgers, ultimately resulting in a fall of about 5 per cent for the week.

"The decline is a temporary phenomenon, and the market will recover soon as supply is not enough to meet the demand," K C Bhartiya, president of Pulses Importers' Association, said.