Commodity Update- Chana to bounceback amid tight demand-supply conditions
The demand-supply situation is tight at present, but with prices now above their MSP levels, farmers might opt for chana
With sowing gaining momentum, particularly in rabi crops, the agricultural market has started responding to acreage figures. For 2018 -19 season, almost 30 percent of the normal sown area (five-year average) has been covered till last week, but for most crops sowing is lower than the corresponding period of last year.
Farm Ministry data shows that 2018-19 acreage till November 16 was 15 percent lower at 191.12 lakh hectares. Lower acreage has been reported mainly for coarse cereals and pulses by 45.29 percent and 18 percent, respectively.
Sowing of oilseeds is down 5 percent compared to last year, with the largest produced rabi oilseed (mustard seed) falling 2.5 percent. The area under mustard seed may increase this season as farmers in Rajasthan may opt for this assured-return crop. As a result, prices of mustard seed are not staying at higher levels.
The largest produced pulse crop, chana (chickpea), breached its minimum support price of Rs 4,400 per quintal for the first time in the 2017-18 season as supplies declined and sown area fell substantially. Chana tested Rs 4,750 per quintal level last week on concerns about lower acreage. By November 16, sowing was 77 percent complete, but acreage at 50.23 lakh hectares was 21.52 percent lower than last year.
Moreover, stockists are left with very low stocks and supplies of imported pulses have substantially reduced. Imports were limited by higher duties and quantitative restrictions. As a result, a substantial portion of demand for yellow-peas has shifted to domestic chana.
Meanwhile, exports have received a boost this season due to competitive domestic quotes and sufficient availability. India exported 1.71 lakh tonne of pulses in April-September, up to a whopping 131 percent over last year.
The demand-supply situation is tight at present, but with prices now above their MSP levels, farmers might opt for chana. Accordingly, the gap may narrow further in coming weeks. Nevertheless, fundamentals point towards a further upward movement in chana and prices may not hold below Rs 4,350-4,400 per quintal in the short to medium term.
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