Urad prices seen surging till Jan

January contract has been top performer on Ncdex

Urad prices have been on a rise for a month now, and the surge is likely to continue till January, traders and analysts said today. They added that the prices would fall thereafter.

The National Commodity and Derivatives Exchange (Ncdex) January contract has been one of the top three performers for over a month now, as half of the commodity's total supply in the country is via imports.

Also, the current demand-supply situation is tight as the Burmese urad crop will be harvested only by the end of January, while the domestic crop is also not expected before mid-February.

"The Ncdex January contract is likely to cross the Rs 2,800 per 100 kg level in the next few days," said an analyst with a Mumbai-based brokerage firm.

Today, the Ncdex January contract ended at Rs 2,713 per 100 kg, after an intra-day high of Rs 2,752.

Urad contracts on the Ncdex for the months of January, February and March are all seeing good volumes, and the open interest, at the end of today's trading, at 87,780 tonne, 86,570 tonne and 88,620 tonne, respectively.

The spot prices are quoting about Rs 30 per 100 kg higher than the futures prices. According to an analyst of Karvy Commodities, "Urad prices will gain further with no imports expected in the short term."

The demand-supply scenario is tightening further following good festive demand from southern states, ahead of Pongal, to be celebrated on January 14.

However, demand in the western and the northern parts of India is flat following high prevailing prices.

According to a daily note by Anand Rathi Securities, "The supply side fundamentals are bullish as there has been a shortfall in production. The market is trying to find direction, and retail demand in the next few days will be detrimental to the further direction of prices."

Further, the supplies from Burma are unlikely to reach the Indian coasts before mid-February, around the same time when domestic arrivals begin.

In anticipation of these supplies, market players are expected to offload their stocks early February onwards, and this is likely to pull down prices.

Last year, India imported about 2.5 lakh tonne urad from Burma against about 1.5-2 lakh tonne usually. This was following a bad crop year.

This year, however, imports are likely to declineas good crop is expected. "Acreage has risen by 10 per cent on year and, thus, crop output is likely to be up by 5-6 per cent, if weather conditions remain fine," said another Mumbai-based analyst.

According to official data, normal acreage for urad is about 4.5 lakh hectares.