With the area under sowing for chana (chick pea) taking a hit due to erratic weather conditions, traders expect imports to rise sharply over the next two months. Increased availability due to imports is likely to pull down chana prices by 10-15 per cent by February 2013 from its current levels.
“Chana prices already hit a high of Rs 4,800-5,000 per quintal in the August-to-October period. We expect about 500,000 tonnes of chana imports this fiscal. This will improve the availability and will soften the prices,” said Suresh Agarwal, vice-chairman, India Pulses and Grains Association.
According to Agarwal, chana sowing has dropped this year owing to erratic monsoon conditions. Also, sowing for overall pulses has dropped this year. According to government data, rabi sowing under pulses is reported lower at 6.3 million hectares this year, compared to 7.61 million hectares last year.
Commodity analysts believe chana prices, which have breached the Rs 4,000 level, could ease over the next two-three months. “There is increased import of chana on the back of tight supply conditions in the domestic market. By February-March next year, we can expect chana to witness a bearish trend,” said Biren Vakil, founder and chief executive officer of Paradigm Commodity Advisors Pvt Ltd.
“Currently, prices have come under pressure, and we do not see any physical demand at present levels. This indicates prices may fall further,” he said.
Even as weakness in prices is expected due to increased imports, traders say prices won’t fall below a certain level.
“The government has set a minimum support price (MSP) of chana at Rs 3,200 a quintal. Hence, we do not see prices falling below Rs 3,500 per quintal, even in the increased import situation,” said Agarwal, who is also an importer.
The government has upped the MSP of all rabi crops, especially pulses, considering the waning interest of farmers due to low returns from these commodities. The MSP of chana has been increased to Rs 3,200 per quintal for the 2013-14 marketing year from Rs 2,800 per quintal in 2012-13, a rise of about 14 per cent.
“This effectively means the acreage under chana could slide eventually and output could be hurt. The NCDEX chana futures had recovered steadily during the first three weeks of October, as the impact of early influx of arrivals in pulses from kharif season wore off. The futures have dropped from highs of Rs 4,369 per quintal to Rs 4,000 levels in a span of around three weeks and are lingering around Rs 4,100-4,200 per quintal now,” said analyst firm Capitaline. On Tuesday, Chana futures for immediate delivery contract on the NCDEX stood negative at Rs 4,324 per quintal, lower by Rs 57 from the previous close.