NCDEX Chana Weighs Down On Ample Supply: April 18, 2012

Chana futures declined for the second straight session on talks that the Rajasthan government may reduce the stock holding limit so as to discourage hoarding by the stockiest.

On account of lower output in Rajasthan, stockiest have started buying fresh chana as harvesting has started over the 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, government has also imposed a special margin on chana and has cut position limits last week. Arrivals in Rajasthan began over the 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.

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 an increase in imports this year. Around 74% of Indian chickpea imports come from Australia. However, despite an increase in Australian chickpea production in 2011-12, lower carryover stocks and increasing domestic consumption may lead to 18% decline in chickpeas exports from Australia in 2011-12.