A sharp price fluctuation in chana (chick pea) market over the past two months has left the trade perplexed. From its 52-week high ₹5,500 per quintal quoted during October, chana spot prices dwindled to ₹4,772 a quintal on December 3, a fall of over 13 per cent in less than two months.

The spot prices, as polled by NCDEX, showed about 8 per cent dip in less than a month from a high of ₹5,193 a quintal on November 12 to ₹4,772 a quintal now.

Besides the estimated increase in the crop, trade also attributed the recent sharp fall in the prices to government’s decision to not extend the free pulses distribution under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) beyond November 30.

The PMGKAY scheme

The scheme for distributing 1 kg of pulses per month per household had covered 1.95 crore households under PMGKAY.

Zhaverchand Bheda, Chairman of India Pulses and Grains Association (IPGA), told BusinessLine that with completion of the free pulses scheme in November, the government is left with sufficient stocks before the new crop arrives in February 2021. “The government has stocks of about 10-12 lakh tonnes, which is sufficient to feed the market for two months before the new crop arrives. So the overall market sentiment changed totally within a short span,” said Bheda.

The market participants suspect that the government will release this quantity with an open tender, thereby fuelling the supplies.

Sources revealed that there is not much of the floating stock — the stock that is available for trade with brokers — of chana available in the market. Most of the stock is currently with the government and leaves very little or no stock to generate trade, hence traders or farmers are not at the loss with the sharp fall in prices.

Importers suffer losses

However, importers are believed to have suffered heavy losses. They had anticipated the prices to remain high owing to the strong demand by restaurants, weddings and events opening up post lockdown. But the offtake didn’t happen on the expected lines. The importers had entered into forward contracts for chana considering the previous high prices of ₹5,300. But with a sharp correction in the prices in domestic market the importers became the sufferers.

Trader sources revealed that large quantities of forward contracts were made for Tanzania’s yellow gram, Russian Kabuli chick peas and Sudan’s Kabuli chick peas.

In a research note, Kedia Commodities, said: “The potential for a major increase in chana output in India limits any hope that import duties on peas will be reduced next year or that tariff rate quotas will be significantly expanded. Chana prices dropped because of prospects for a big increase in India’s productions of pulses. Pressure is also seen amid concerns of negative crush margins in China will make peas seem expensive.”

Chana December futures on NCDEX on Thursday quoted at ₹4,817, with average trade price at ₹4,792 a quintal.

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