The Hindu Business Line : Chana prices gain on hopes of festival demand

Behind the surge
The rupee has slid to Rs 40.74/75 from Rs 40.37 a few weeks ago.
Stocks in chana are declining with delivery being high this month.

M.R. Subramani

Chennai, Aug. 15 Chana (gram) prices have gained in spot and futures market on hopes demand will increase with the festival season round the corner. The rupee’s decline, a drop in inventories and fears rains could wreak damage to crop of other pulses and lentils in Rajasthan and Gujarat have also buoyed chana.

Spot prices

Spot chana prices are currently quoting between Rs 2,425 and Rs 2,525 a quintal in various markets, up Rs 50-150 since last week. In the futures market, chana contracts for August are quoting at Rs 2,266 a quintal, up from Rs 2,227 at the beginning of the month, while September contracts are ruling at Rs 2,351 against Rs 2,301 on NCDEX. October and November contracts are quoting above Rs 2,400.On MCX, August contracts are ruling at Rs 2,297, while September at Rs 2,339.

“One of the reasons for chana prices to surge is that the rupee has slipped to Rs 40.74/40.75 against the dollar. It has made imports dearer,” said a Mumbai-based trader in pulses.

According to Sharekhan, buying in chana counter has lifted the prices sharply during the last few sessions. “The market is gradually reviving due to increased participation of millers, who are buying for the forthcoming festival season,” it said in a note.

Since it was an “off-season”, supply was limited and this could mean chana prices could rule steady to slight firm in the coming days.

Ms Akshita Bhatt, research analysts of Kotak Commodity Services Ltd, however sees a bearish trend for chana in the short-term and a bullish trend in the long-term.

“There are enough stocks in NCDEX warehouses which will cast downward press in the markets. Also, steady supply of yellow peas in the market, which is used in the preparation of besan, an important ingredient for most delicacies during festivals, will keep the markets suppressed,” she said.

Mr Kumar Jaisingh of the All-India Pulses Importers Association said chana prices had gained since import options had turned tough. “The fall in the rupee against the dollar has resulted in chana prices rising to $585 a tonne in the global market. Last year, Australia had a severe drought and it has no stocks now. The new crop is expected to hit the market sometime in September/October and until that, supplies are squeezed,” he said.

Myanmar, another source for chana, was offering the commodity at $640. “Chana from Tanzania is available at $685 but with more trash content,” Mr Jaisingh said.

Dipping stocks

Sharekhan said chana stocks were declining continuously in the last one month with deliveries being heavy this month. “Stocks are down to 12,000 tonnes as traders are offloading it in the spot market,” it said.

Ms Bhatt said imports were expected only from November onwards but the Australian weather during harvest would hold the key.

Heavy rains, which have caused extensive damage in States such as Rajasthan, Bihar and Gujarat, are also a reason for chana prices to rise.

“There are fears of damage to pulses and lentils in areas bordering Gujarat and Rajasthan,” the Mumbai-based trader said.

RESISTANCE

According to Ms Bhatt, September contracts on NCDEX could face resistance at Rs 2,355 levels and for investors, it would be prudent to go long or buy at every dip. “NCDEX September below Rs 2,315-2,310 levels would be good buying option with an upside target of Rs 100,” she said.