NCDEX Chana Rebounds On Short Covering: April 22, 2012

Chana prices rebounded sharply on Thursday and settled 1.54% as the sentiments turned positive after the CACP recommended 25% hike in Kharif Pulses i.ie Tur and Urad. The recommended minimum support price is around 4125 per quintal for urad and 4375 per quintal for moong.

In addition to this, improved physical buying at lower levels also supported the positive sentiments.

Arrivals in Rajasthan has began since last 2-3 weeks, however, the pace is very slow on account of a sharp drop in yields and thereby output in Rajasthan, the second largest chana producing state.

During the current season, despite of peak arrival period, prices are not declining much as supplies are comparatively lower on the back of lower output, while demand seems to be very strong.

As per the NCDEX circular dated 11th April, Initial Margin(IM) of 10% of the value of contract or VaR based margin whichever is higher will be imposed on all contracts and yet to be launched contracts of chana with effect from beginning of the day Thursday April 12, 2012.

To curb excess volatility in prices, government has also imposed special margin on chana and has cut position limits last week.

Demand Supply Scenario

The import of pulses is likely to cross three million tonnes this fiscal year due to growing demand, country's apex body of pulses industry and trade said on Wednesday, 4th April.

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.

As output is likely to decline, India's pulses imports in 2011-12 (Apr-Mar) may rise nearly 10% from 2.75 mln tn in the previous year. India's consumption of pulses is on the rise with an annual growth of around 5% but production is seen lower, which may lead to increase in imports this
year. Around 74% of Indian chickpea imports come from Australia.

However, despite increase in Australian chickpea production in 2011-12, lower carryover stocks and increasing domestic consumption may lead to an 18% decline in chickpeas exports from Australia in 2011-12.