NCDEX Chana Remains Lower On Higher Arrivals: April 19, 2012

Chana prices remained bearish for the second consecutive day owing to  increased arrivals in the domestic market and on talks that the Rajasthan  government may reduce the stock holding limit so as to discourage  hoarding by the stockiest. Spot prices and futures settled 0.73% and 1.30% lower on Wednesday.   

On account of lower output in Rajasthan, stockiest have started buying fresh chana as harvesting has started since last 2-3 weeks and they  expect prices to remain firm during the current year. Thus, reducing the holding limit may lead to liquidation of excess stocks  and avoid cornering of stocks. 

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, the government has also imposed a special  margin on chana and cut position limits last week. 

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

Demand Supply Scenario

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

 As per Commerce Ministry, imports of  chickpeas, pea and tur by India  rose by 1655%, 25% and 16% to 1.7 lakh tn, 16.52 lakh tn and 0.34 lakh  tn respectively (Source: Agriwatch).

With the commencement of harvesting in MP, the largest Chana  producing state in India with more than 40% share, we expect supply  pressure to build up gradually. 

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 Chickpeas production in 2011-12,  lower carryover stocks and increasing domestic consumption may lead to 18% decline in chickpea exports from Australia in 2011-12.