The Hindu Business Line : Urad futures prices gain further ground

Happenings
Limited stock availability seen the reason for the sharp rise.
No parity in import prices; shipments into the country scanty.
Lack of precise estimate on crop behind the current spurt in prices.
Hope around on reports of Myanmar scrapping 8.23% export duty.

Chennai , Aug. 21

Prices of urad (black matpe) futures contracts increased between 2 per cent and 5 per cent on Monday and signals from the trade are that the counter looks bullish.

On NCDEX, September contracts closed at Rs 3,064 a quintal against Rs 2,998 on Saturday and Rs 2,690 a fortnight ago. October contracts were up at Rs 2,768 from Rs 2,702 and Rs 2,447 respectively. December contracts showed a sharp increase at Rs 2,695 from the weekend's Rs 2,581. A fortnight ago, it ruled at Rs 2,445. Spot prices in Mumbai ruled at Rs 3,050-3,150 a quintal against Rs 2,950-3,000 two weeks ago. On MCX, September futures ruled at Rs 3,110.

"The prices are reflecting the actual physical stocks in the country. They are limited," said Mr Kumar Jaising, Director of the Mumbai-based Shalom Trading Pvt Ltd.

"The ground realities are coming to the fore. The main growing areas have been disturbed by flood. People are finding that there will be shortage in the days ahead," he said.

Crop damage

According to trade sources, fears of crop damage in Maharashtra and Gujarat are adding fuel to the prices "already on fire".

"Only the National Agricultural Cooperative Marketing Federation and PEC seem to have stocks. No one in the private sector can dare to buy huge quantity at these levels," the sources said.

"Imports are very scanty as there is no price parity," Mr Jaising said.

Myanmar is the main source of urad imports by India but it was quoting a very high price, according to trade sources. Currently, it is quoting around $670 c&f Chennai against $620-635 two weeks ago.

Bullish trend

According to Kotak CSL Research, delivery intentions on NCDEX in August was around 250 tonnes against stocks over 2,500 tonnes. This, according to it, is an indication that prices are likely to rule firm.

Though trade sources feel the rise in urad prices from here could be limited, the market, according to Mr Jaising, is looking bullish.

"There are three festivals - Ganesh Chathurthi, Ramzan and Diwali - approaching and demand for the pulse will be high," he said.

But a silver lining for consumers could be that on Monday, Myanmar announced that it was scrapping the 8.23 per cent duty it was levying on exports.

No proper estimate

"Initially, the prices could come down by eight per cent but subsequently, it could rise by four per cent," Mr Jaising said, adding that exporters in Myanmar usually restored to raising prices whenever duty was cut.

According to trade sources, lack of precise estimate on the urad crop was behind the current spurt in the prices. "Speculation is keeping the market up," they said.

The country on an average produces 10 lakh tonnes of urad with 40 per cent if coming from Maharashtra.

According to the Union Ministry for Agriculture, urad coverage during the current kharif has increased by one lakh hectares (lh) to 98.45 lh.

The rise in prices of other pulses has been marked in the case of urad since it could not be substituted like other pulses.

"We can substitute moong or other dals with one another but not urad," said the sources.

The main-growing regions of Maharashtra, which account for 26 per cent of the area under the crop, such as Nanded, Parbani and Latur, have been affected by the recent rains.

Surat and Rajkot in Gujarat along with growing regions in Andhra Pradesh have also been feared affected by the monsoon fury.

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