The Hindu Business Line : Chana prices may rule firm on tightening supplies

Chana (gram) prices have declined by over 10 per cent in the last couple of days from a peak of Rs 3,250 a quintal but the rates are likely to rule firm on tightening supplies.

"Prices have declined mainly on arrival of the kharif crop. But whatever is coming to the market is being bought off," trade sources said.

Kharif pulses production is expected to rise by 10 per cent to 50 lakh tonnes. Chana output is expected to rise, though a clear estimate is not available.

"The Indian situation will become clear only after real estimates of new crop become available," said Mr Sudhakar Tomar of the Dubai-based Hakkan Agro Commodities Trading Co.

"Indian rabi crop will arrive in the market only in January end. Till then, we expect the prices (of chana) to remain firm," said Kotak CSL Research.

On Thursday, chana was quoted at Rs 2,900 a quintal in Hyderabad spot market. The prices have been ruling at this level for the past one week.

In the futures market, November contracts on NCDEX closed at Rs 3,039 a quintal, while on MCX it ended at Rs 3,252 a quintal.

According to Kotak CSL Research, technically there could be a gradual uptrend in prices.

Prices for far-month are in backwardation (lower than near month contracts) but that is in anticipation of arrivals during February and March. However, technicals too point at tightening supplies in the short-term.

The current firm trend, despite kharif arrivals, is due to a lower than anticipated gram crop in Australia. The crop there is estimated to be 2.22 lakh tonnes against earlier projections of 2.74 lakh tonnes. "This may result in supply constraints in December-January (Australian crop arrives in India around December-January) as it is the sole supplier of chana in the present scenario)," said Kotak.

The other factor to keep the prices firm is that Pakistan has also turned an importer this year. Last year, it was an exporter of the pulse.

"Pakistan and Iran have already imported good volumes due to local shortage," said Mr Tomar.

According to him, all exporting countries such as Australia, Canada, Tanzania and Ethiopia have gained from the current trend. "Even new origins such as South Africa and Ukraine have benefited or are benefiting," he said.