Mumbai Commodities Control) – Chana pulses are on the roll amid bullish fundamentals. Chana futures on the National Commodity and Derivatives Exchange (NCDEX) continued their uptrend on Tuesday on the back of good demand. The April delivery was up 2% at Rs 5,312 a quintal on Tuesday.
Chana futures on the NCDEX has been moving up consistently for the last few days on expectations of better demand during the forthcoming festival season amid lower inventories.
Fundamentals Underpinning Price Rise
The concern of unseasonal rain in the early part of this year has stoked up crop damage fears in some of the northern states.
In addition, the government has spruced up procurement through minimum support price as higher arrivals at major markets have pulled down spot prices below the Rs 5,100 per quintal. Chana arrivals last month increased three-fold to 6.4 lakh tonnes.
The government agency NAFED has reportedly procured 1.24 lakh tonnes of chana in Andhra Pradesh, Maharashtra, Madhya Pradesh, Telangana, Karnataka and Gujarat.
Chana procurement initiated by the Government agency led to tight supply situation, as the processors and stockist continue to look out for stocks for procurement.
Having said so, most of the arrivals are now diverted to NAFED in MP. With arrivals drying up in Maharashtra and Gujrat, millers are finding it difficult to procure chana in appropriation with demand size in dals and besan.
On the other hand, price rally may hit tailwinds due to rapidly rising Covid cases across India which has forced Govt to make some tough calls including complete lockdown in some of the key consumption centres in MP and Maharashtra. So despite acute tightness in availability of chana, lower demand is likely to keep a lid on aggressive price rally.
Demand, here, will be key to price movement in chana spot and futures, going ahead.
Chana Supply Demand Balance Sheet (Jan-Dec)
|
India Chana Supply Demand Balance Sheet (Jan-Dec)
|
|
All Units in Million MT
|
2018
|
2019
|
2020
|
2021
|
|
Opening Balance
|
2.6
|
2.7
|
2.2
|
1.9
|
|
Production
|
8.1
|
7.2
|
8.5
|
8.5
|
|
Imports
|
0
|
0.4
|
0.2
|
0.4
|
|
Total Supply
|
10.7
|
10.3
|
10.9
|
10.8
|
|
Domestic Consumption
|
8
|
8.1
|
8.9
|
9.2
|
|
Exports
|
0
|
0
|
0.1
|
0.1
|
|
Total Usage
|
8
|
8.1
|
9
|
9.3
|
|
End Stocks
|
2.7
|
2.2
|
1.9
|
1.5
|
|
Stock to Consumotion Ratio
|
34%
|
27%
|
21%
|
16%
|
Chana Price Outlook Direction
To support our argument that demand in Chana is disproportionately higher than corresponding demand in Dals and Besan please refer to our spread analysis on Besan Vs Chana spot prices.
The chart clearly depicts that there is weakness in besan or chana dal due to lower consumption or demand. This is attributed to heavy restrictions on movement on account of rise in Covid cases. On the other hand, the supply of chana in spot market is tighter due to lower carry over stock, and lower production in key states of MP and Rajasthan.
Market ought to find balance between lower supply and lower demand which will keep prices dwindling on both sides making market volatile. But we reckon that tighter supply will be dominant factor over lower demand taking prices higher in coming months.
Charts indicate that spot chana in Delhi is headed for Rs 5,800, after a breakout above key resistance of Rs 5,125/Quintal levels.
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Chana dal Besan - Chana Spot Delhi Spread
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