Chana Markets up Rs.100-125/qtl in last two weeks; Firm Prices likely this week as well

Indian Chana markets continued trading with positive note in last two weeks. Average prices for the NCDEX specified grades are up Rs100-125/qtl in mandis of Akola and Bikaner for the above mentioned period. Improved demand from millers has improved as the un-lockdown phase has started. Since transportation activities have increased due to this, the millers are increasing their operating capacity slowly. Government’s announcement of providing free Pulses to the poor till November is also supporting the price rise, since it has resulted in higher procurement by the Government agencies.  

The NAFED had recently distributed around 5 lakh MT of Chana to States Union Territories under the PMGKAY Extension as against the target of 9.73 lakh MT up to Nov. 2020. The supplies shall benefit around 20 Crore families across India, providing great relief against the ongoing Pandemic. The rest 4.73 lakh MT would be distributed till Nov-2020. This development has enhanced consumption of Chana and continues favoring price appreciation.  

Recent hike in MSP (Minimum Support Price) of Chana is a good decision for farmers in enhancing their income levels. From a broader perspective, this decision is expected to keep average Mandi prices of Chana on upward track in coming months. For 2020-21 marketing season the government has increased the MSP of Chana by Rs.225/qtl to Rs. 5100 per quintal.  

With Centre’s taking frequent initiatives to benefit farmers to get better rates for their produce, trade interest has improved significantly in recent months and is expected to favor further rise in prices in near term. Recent scrapping of the Essential Commodities Act too is another positive price driver since demand from stockists is likely to remain better.   

Another key factor supporting the price rise is that there is no import parity till Rs. 6000-6500/qtl. Therefore chances of imports to occur are unlikely this year, thereby keeping supplies restricted. At the same time inflation is well under control so intervention from the Government is least likely as of now. Also the daily arrivals till date are quite lower than the daily arrivals during corresponding period of last year. This is indicative of the fact that farmers and stockists are still holding most of the produce (anticipating further price appreciation in near term).This also indicates that the actual production of Chana for year 2019-2020 may be lower than the year before.  

Traders expect festival related demand to improve this week onwards. Consumption continues under the PMGKAY scheme while demand for sowing will improve soon as the planting season approaches. Around 7-10 Lakh tonnes of Chana will be required additionally, for the sowing operation as per trade sources. Chana sowing may commence in about 8-10 days. Only NAFED is reportedly having most of the inventories, and traders, stockists or millers are having limited number of inventories in hand as per market estimates. NAFED will not sell much now since it has to maintain sufficient buffer against any unfavorable scenario like sharp price spikes, crop production failure etc. All in all, supply remains limited against improving demand situation. Therefore Chana prices may remain firm this week as well. The superior grades of Chana are being traded near Rs. 5500/qtl presently. Farmers who are still holding their stocks should not sell as of now.