India Tur 2015-16 Production May Decline; But Sharp Rise In Prices Unlikely

MUMBAI (Commoditiescontrol) – Tur (pigeon pea) made headlines last year after its prices sky rocketed in domestic markets due to wide gap between supply-demand.

However, the Central government imposed certain restrictions on stocking in a move to check rising prices, as increase in prices has hurt the common man’s kitchen.

Meanwhile, the new season’s supply of domestic tur has already started in many parts of the country, coupled with supply of imported tur from overseas markets. Therefore, prices are likely to feel the pressure from increased availability.However, several questions are still revolving around the business, i.e. whereabouts of production, market outlook and situation in Burma.
In an attempt to find clarity over these major elements, Commoditiescontrol has carried out an extensive survey and spoke to scientists as well as the traders to find out the country’s production more scientifically.

Deficient Monsoon/Dry Spell Hurts 2015-16 Tur Production
India is the major producer of tur in the world after chana (gram), but in recent years production of tur decreased due to unfavorable weather conditions and long dry spell during growing season. The major tur producing states of Maharashtra, Karnataka, Uttar Pradesh among others are showing a significant shortfall in tur production in 2015-16 season.

The following table 1 shows the estimated production of tur for 2015-16. The estimation has been prepared to get an idea about the future situation of domestic as well as global tur market. The estimation has been made on the basis of the feedback received from concerned traders in the major producing states and Krishi Vigyan Kendra (KVK) scientists from various districts of the different states across the country. Analysing the data in the following table, we came to some conclusion about tur production in India for the ongoing season 2015-16:

Table 1: Estimated Tur Production During 2015-16 In India
(Area Lakh Ha, Production Lakh Tonnes &Yield kg/ha)


Source: 1 http://apy.dacnet.nic.in/crop_fryr_toyr.aspx
2 Districts and State Concerned Traders & KVK Scientists
3 Estimated from 1 & 2

· The above table showed that tur production in the country will again drop this year by 8.52 percent. But prices are unlikely to see any major upside in the near months as the government is keeping a close eye on prices.

Factors To Keep Tur Under Stress
· Government policies and intervention like stock limit, raids on illegal hoarding, imports through government agencies to make pulses available in domestic markets coupled with procurement for buffer stocks to control pulses rates will continue to worry market participants.
· Apart from imposing stock limit on pulses, the government has also restricted millers, stockists and traders from any major holding.

Click Here To View Stock Limit In Various States (Updated As On Oct 7, 2015)

· Supply of new tur has already started in domestic markets, but there are hardly any major buying activity in spot markets as key takers of the commodity are sidelined due to various interventions by the government.

· Stockists and millers are the key buyers at the time of peak arrival time and provide necessary liquidity to the farmers and market as well. But so far this season, they are yet to buy in bulk quantity.

· Corporate buyers and major importers are sidelined mainly because of liquidity crunch as they might have incurred huge losses due to sharp fall in pulses rates in the recent times, especially tur.

· As many players in tur have faced defaults in trade due to sudden and sharp fall in prices, they may not enter in market aggressively this season due to liquidity crisis and fear of government intervention.

· Dwindling prices of other pulses will also weigh on tur prices in domestic markets.

· Further, to ensure that prices of pulses do not flare up any further, central security agencies including Intelligence Bureau and Directorate of Revenue Intelligence have been asked to keep a close watch on tur, urad and gram traders to check speculation and hoarding.

· Furthermore, the Consumer Affairs Ministry is regularly discussing with central security agencies -- IB, DRI, Income Tax Department, Directorate General of Foreign Trade (DGFT) for further actions to curb "satta operators" in pulses trading and keep prices under control.

Imbalance In Supply-Demand May Support Tur During Fag End Of The Season

· Supply of tur in the country is likely to remain tight this season as well despite increased imports.

· At present, supplies are enough to meet the near term requirement, but scarcity in later months may help prices recover from the current level or after a marginal correction.


· The technical charts (given below) also indicates correction in tur prices are in process of bottoming out after a steep fall.

· However, next monsoon season forecast 2016-17, expected to be released by India weather office by around April-end, will be crucial as good rainfall forecast may boost kharif sowing and limit any major upside in tur.

Conclusion:
By analyzing government policies followed by supply-demand situation, Commoditiescontrol has come up with the following conclusion.

· Tur prices may trade flat to negative in the near months
· Supply-demand situation will get tight as the month progresses
· However, strict government policies will cap any big upside in tur
· Hence, price direction is difficult to predict for the current season, however supply will remain neck-to-neck against demand as ending stocks are likely to fall to multi-year lows

Technical Outlook: Dated 10/02/2016
Tur Lemon Mumbai - Correction still in progress



Chart Description
Correction in prices of Toor Lemon is being witnessed. A retracement of the rise from 2150 (August 2011) to 15400 (October 2015) is in progress.

Retracement levels are placed at 7986 and 6569. The earlier peak and breakout point was at 5851 formed in October 2009.

The same was crossed to register a peak of 15400. In the earlier update, we had mentioned about the correction can it continued to recent low of 7550.

On the Wave structure, we can in the process of Wave B of larger degree with internals of Wave (a) in progress and may end any time now or at 6550. The price can correct down to the earlier breakout points of 5850 or below before moving higher. Immediate, if Wave (a) is terminated then the Wave (b) will resume.

Indicator Scenario
MACD has moved below the zero line
RSI/Stochastic is falling indicating correction in progress.

Conclusion
Correction is still in progress and may conclude and pullback or recovery may happen at current or at lower levels of 6668 and 5850.

In case of recovery, higher levels of 8800-11250 may be tested.

(By Commoditiescontrol Bureau; +91-22-40015533)