Chana is a highly-nutritious, protein-rich pulse crop. It is one of the largest cultivated food legumes across the globe. Indian culture is predominantly vegetarian and pulses form an inherent part of the diet; chana being one of them. India is the largest producer, consumer and importer of pulses and is central to any discussion in the world of pulses.

Chana prices have largely remained bearish over the last few months as a record domestic production for the second consecutive year in the 2013-14 season put pressure on prices. Carryover stocks of 2012-13 season, coupled with record output last year, lead to a comfortable supply situation.

NCDEX chana futures declined to ₹2,651 in July from ₹3,416 in March, the lowest since August last year. Currently, November futures are trading at ₹2,850.

Chana is the largest consumed pulse in the country and is largely dependent on imports to meet the domestic consumption needs. This has lead to a rise in the food import bill, impacting the country’s fiscal deficit. To curb rising imports, the Government tried to boost domestic production and made a significant hike in the minimum support price (MSP) of chana from ₹1,760 per quintal in 2009-10 to ₹3,100 in 2013-14. This encouraged many farmers to bring more area under chana.

According to the fourth advanced estimates released by the Ministry of Agriculture, chana output in 2013-14 is estimated at 9.88 million tonnes, up 11.9 per cent compared with 8.83 million tonnes the previous year. The Government had initially set a target of 8.66 million tonnes. Increased acreage and favourable climatic conditions in the major producing States such as Madhya Pradesh, Maharashtra, Rajasthan and Karnataka also helped to push up the yield.

Being a rabi crop, sowing of chana takes place after the harvesting of kharif crops between October and December, while harvesting takes place from January through May.

Lower prices on the back of record output and comfortable supplies may force farmers to switch over to other remunerative crops such as mustard and coriander which could yield better returns. Due to this, the Government has set a target of 9.3 million tonnes for chana output for 2014-15 rabi season, down 5.87 per cent.

Currently, sowing of the kharif crops has been completed and 10.11 million hectares have been brought under various crops, down some 6.5 per cent year-on-year. Due to delayed rains and lower acreage, the Government has estimated kharif pulses output for 2014-15 at 5.2 million tonnes against 6.02 million tonnes a year ago. Delayed South-West Monsoon resulted in lower kharif pulses acreage.

In the days to come, chana prices are expected to largely rule weak as abundant supplies may continue to mount pressure on prices. Revival of rains in the latter half of the monsoon has also set ground for sowing of chana, and prices may remain at ₹2700-2650 for the November contract. However, festive and marriage season are around the corner, and thus, demand from the snacks and sweets industry may provide some cushion to the downside movement. Prices have sustained below the MSP levels for a significant period, and thus, short coverings may also be seen at lower levels. Prices may rebound to ₹2950-3000 levels.

Technically, Chana November contracts, which are currently trading around ₹2,850, may find support at ₹2,750-2,650 and see resistance at ₹3,000-3,150 in the near-term.

The writer is an Associate Director - Commodities & Currencies, Angel commodity Broking. The views are personal.

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