Pulses prices surge on strong demand, weak output

The prices of staples continue to burn a hole in the common man’s pocket. After onions, the wholesale prices of tur (arhar) dal have risen by ₹500-1,750/quintal (qtl) across major markets such as New Delhi, Mumbai, Chennai and Kolkata.

Tur prices have been trending on the higher side since late April, but the sudden jump is surprising given the government’s intervention in procurement and maintaining a zero import duty.

Although some retail outlets are quoting nearly ₹200/kg in New Delhi, the prices of tur are unlikely to come down till the new crop hits the markets in December-January.

“Domestic demand is rising and is estimated to be 3 million tonnes (mt). There was a shortfall in production last year. Imports are not viable since there have been shortages in major producing countries such as Myanmar, which is a supplier,” said Bimal Kothari, Vice-President, Indian Pulses and Grains Association.

Private companies have contracted 250,000-300,000 tonnes of tur from East African nations such as Kenya and Mozambique.

About 200,000 tonnes will be imported over this month and November, Kothari said. Only 50,000 tonnes are believed to have been imported so far by private contractors.

The Centre is looking to purchase about 10,000 tonnes through MMTC; 3,250 tonnes have already reached Indian shores.

“Imports by the government are too little to soften prices given the demand. Imports by private parties, too, are unlikely to bring tur prices down. It’s difficult to see the situation change till the new crop arrives,” he said.

Veeresh Hiremath, Head of Research, Karvy Comtrade, said the government has to import at least 50,000 tonnes of pulses rather than placing orders for just 5,000-10,000 tonnes to bring down prices.

“With India shopping for pulses in the export markets, prices in the international markets have shot up substantially,” he said.

India, the world’s largest pulses buyer, purchased 4.58 million tonnes in 2014-15 against 31.7 mt in the same period last year.

Tur prices on the Mumbai wholesale market touched a high of ₹15,250 on Tuesday. This was on the back of strong demand ahead of the festival season and expectations of lower arrivals. This is a whopping 126 per cent increase from the same time last year and 65 per cent higher than three months ago. In Delhi, it touched ₹14,000/quintal, while it hit ₹16,000 in Chennai — rising by ₹1,000 in just three days.

On the retail front, Delhi recorded a 95 per cent increase in prices over last year and Kolkata, a 44 per cent increase in three months to ₹150, as of Tuesday.

Assocham expects prices to keep rising due to seasonal demand and continue to remain an exception to falling consumer inflation.

The four-month-long South-West monsoon ended with a 14 per cent deficit last month but agronomists expect tur output to be the same as last year.

Acreage as of October 9 is pegged at 38.01 lakh hectares — about 5 per cent higher than that at the same time last year, which also saw a sub-normal monsoon.

Tur coverage is higher in Madhya Pradesh, Karnataka, Andhra Pradesh and Uttar Pradesh.

Maharashtra, which traditionally has the highest area under the crop, has recorded a marginal decline of 0.1 lakh hectare.

“If rain has not been significantly lower in an area, the crop will not have suffered much since excess moisture is a bigger worry for tur. In most of Central India, the crop is showing good flowering and pod-setting,” said KV Prabhu, Joint Director of Research, Indian Agricultural Research Institute.

Further, late rains in areas such as Kalaburagi district in North Karnataka, a key tur producing region, would have helped during the grain-filling stage, he said.

“It’s unlikely that production will fall — it’s likely to be the same as last year,” Prabhu said, and urged government agencies to procure pulses like tur to prevent fluctuations in prices caused by traders who were hoarding the key protein source.

The government’s first advance estimates released last month, however, estimated tur production in 2015-16 will decline by 1 million tonnes (mt) to 2.61 mt from the 2014-15 fourth estimate of 2.71 mt.

This is likely to be revised over the year.

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