1. Commodity News

Chickpeas/Chana markets down currently – where can prices go next year

Abhijeet Banerjee
Abhijeet Banerjee
Chana
Chickpeas/Chana

Market Reverses from November High: Chana reversed from its downward journey April onwards. Improving demand from millers and retailers were seen after the unlocking phase started.

Government’s announcement of providing free Pulses to the poor till November had also supporting the price rise, since it resulted in higher procurement by the Government agencies. The scheme was aimed to benefit around 20 Crore families across India, providing great relief against the ongoing Pandemic. This development was able to enhance consumption of Chana and favored the price rise.   

Additional support came from Government’s hike in Chana MSP for 2020-21 marketing season by Rs.225/qtl to Rs. 5100 per quintal. Strength in other major pulses such as Tur and Mung added to the bullish trend. The daily arrivals during the harvest season were quite lower than the daily arrivals during corresponding period of last year. This was indicative of the fact that farmers and stockists were still holding most of the produce (anticipating further price appreciation in near term). This also suggested that the actual production of Chana for year 2019-2020 was lower than the year before.

Chana prices in 2020 touched 5600 level in November month before reversing the upward trend. The trend reversed by middle of November mainly on stiff competition from cheaper vegetable prices, as vegetables are economic substitute for Chana, and sufficient inventory lying the NAFED as well as stockists, who preferred liquidating the stocks once the spot prices at key trade centres failed to sustain above 5500. 

Where Can Prices Go Next Year: Pricing of Chana is unlikely to improve much in coming weeks because of competition from cheaper availability of green vegetables. Generally during winters vegetable prices are lower due to which traders of Chana find it difficult to price the product higher.  The inventory lying with government and stockists still seem adequate to balance the consumption till the new season crop arrives. The sowing area of chickpeas is running above last year, reflecting a higher crop size for this season.  

Therefore March and April months can be bearish because of peak arrival season, and will be discouraging any upside rally. However the domestic market participants remain optimistic about trading activity to improve during the first quarter of 2021 because the Ramazan season begins in April this year and usually purchases of pulses increase during this period. At the same time the new season arrivals start decreasing then. Government procurement is expected to remain healthy which will be another supportive factor after April month. As the carry forward inventory till March end will be lesser over previous year, markets will constantly attracting stocking interest once the harvest pressure starts reducing. Summing up, a sideways trend till first quarter of 2021 may be seen, followed by an upside rally till second or third quarter. Reversal can be expected during later part of the 2021. 

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