Diminishing supplies and physical demand have ensured a bull-run in chana prices since June this year. Import restriction and lower acreage will keep chana prices firm in the coming months as well.
Chana have climbed 46 per cent from the lows in June on the National Commodities and Derivatives Exchange (NCDEX). It was trading at a four-year low of Rs 3,250 per quintal in June. It shot up to the yearly high of Rs 4,741 per quintal in November and is currently trading at Rs 4,510 per quintal.
In July, prices started going up when the government increased the import duty and limited the quantum of imports for July-September to 100,000 tonnes. Import of chana attracts 60 per cent customs duty and this led to lower imports and lesser availability in the domestic market. On the other hand, the government also imposed 50 per cent import duty on yellow pea, a cheaper substitute of chana, and this increased the demand for chana in the market, said Ritesh Kumar Sahu, fundamental analyst, agri commodities, Angel Broking.
As a result, chana imports fell by 93.4 per cent in first five months of 2018-19 to 22,500 tonnes compared with 340,000 tonnes last year. Meanwhile, chana exports were up by 173 per cent to 120,664 tonnes during the first five months of 2018-19 compared with 44, 249 tonnes during the same period last year. These developments helped prices surge 21.6 per cent.
But by August, prices fell by 8.4 per cent when the National Agricultural Cooperative Marketing Federation of India (Nafed) liquidated around 2.6 million tonnes of its stocks after the prices went up to Rs 4,500 per quintal, above the minimum support price of Rs 4,400 per quintal.
Prices once again started reviving after the reports about lower acreage started doing rounds. As per the data released by the agriculture ministry, the acreage under chana is down by about 21 per cent to 5.02 million hectares as on mid-November. While the acreage is almost similar to last year in Madhya Pradesh, it is down by 48 per cent and 42.3 per cent in Maharashtra and Karnataka, respectively. This was a common trend across all pulses. The pulses acreage has come down to 7 million hectares compared with 8.53 million hectares in the corresponding period last season.
The production targets also were lowered due to lesser acreage. In first advance estimate, the government set a production target of 10.5 million tonnes of chana, down 730,000 tonnes from last year’s estimates.
Chana stocks in the physical market have weakened due to higher domestic consumption during the festive season and lower imports. The market conditions can push chana prices further.
“Going forward, chana futures may touch Rs 5,000 per 100 kg mainly on tight demand-supply situation arising from higher domestic consumption and restricted imports. Moreover, lower production estimates, patchy rains during the monsoon season, improving exports due to 7 per cent incentives to exporters will support prices in the coming two to three months as the sowing progresses,” said Sahu.