Chana Settles Higher on Lower Production Concerns

Chana Spot prices and Futures continued to trade firm and settled 0.32% and 1.74% higher respectively on Monday on reports that production of Pulses as well as Chana will be lower as compared to previous year.

Further, emergence of fresh demand at lower levels also supported prices to strengthen.

According to Second Advance estimates Pulses output is expected to fall by 5.26% to 17.29 mln tonnes as compared to 18.24 mln tonnes in 2010-11. Chana production is expected to decline by 6.8% to 7.66 mln tonnes as compared to 8.22 million tonnes in the last year.

Chana area till January 27, 2012 was lower by 4.11% and stood at 89.57 lakh hectares as compared to 93.41 lakh hectares in the same period previous year.

Crop progress and Production

Chana is the main Rabi Pulse crop grown in India, sowing of which is done during October-December, and harvesting begins in January. Sowing of Chana began on a brisk note; however, the progress was not satisfactory in Maharashtra, Karnataka, UP, Bihar and AP and thus acreage has declined drastically.

Further, unfavorable weather in Central and Southern India may lower Chana yield in the coming season. MP is the largest Chana producing state in India with more than 40% share in total production, followed by Maharashtra -12-14% and Rajasthan- 10-12%.

According to the Rajasthan farm department’s first advance estimates for Rabi crops, Chana output is estimated 7.8% lower at 14.75 lakh tonnes in 2011-12 seasons against 16 lakh tonnes in 2010-11.

Maharashtra’s 2011-12 Chana output is seen at 7.5 lakh tn, down 42%, while Karnataka’s 2011-12 output is seen at 4.98 lakh tn compared to 6 lakh tn last year.

Indian government is targeting total pulses output of 17 mln tn in the current crop year that started July 2011, down marginally from last year's record production of 18.09 mln tn on account of 10% decline in Kharif Pulses output.

Although government has targeted higher Rabi Pulses output, it is difficult to achieve the same taking into consideration the sowing progress and prevailing weather conditions.