Chana May Witness Temporary Bounce Back On Low Level Buying

MUMBAI (Commoditiescontrol) - Chana prices in the recent times was in highlight due to consistent fall in prices due to sufficient availability of crop against demand weighed by higher Matar (Peas) imports, which is used as substitute for Chana. Further there was many other reason like absence of stockists buying, lackluster demand in processed chana (dal) due to issue GST issue.

Chana prices so far, this month in October dropped more than 13% and lost 34% this year due to reason as discussed above, but some temporary bounce-back in prices can't be ruled out.

Chana prices are now at critical juncture mainly ahead of sowing followed by new crop supply expected from next month-end from Australia.

The technical and fundamentals in chana is now suggesting that prices are now at important stage and may bounce back temporary due to thin arrivals in the market amid slow farmers and stockists selling at the lower level followed by delay in sowing in few key producing belts amid adverse weather conditions.

Further the supply arriving in the markets is mostly average, whereas millers prefer to procure good quality Chana for processing and thus demand for good quality Chana may help in revival in prices at least in the near term. Stockists are holding good quality chana with anticipation of better return ahead, whereas releasing average quality Chana.

Lower production in Australia followed by concern about quality due to adverse weather during the key growth stage is also one the factor that could support Chana prices at the prevailing lower rates.

Australia chana production during 2017-18 forecast to decline to 11.88 lakh tonnes from 18.54 lakh tonnes a year ago, said Australia agriculture department (Abares) in its latest report. However, market players are betting crop at 10 lakh tonnes as they asses more damage to the crop due to frost.

Also, there could be good demand for chana seeds this season as farmers are inclined towards Chana crop due to better rates compared to other crops followed by Rs 400 MSP hike by government. India government on October 24 announced Chana MSP at Rs 4,400/100Kg against Rs 4,000 (including Rs 200 as bonus).

There is more than 3-months of time for new Chana crop to hit the domestic market and until then local demand will be very much rely on imports and domestic supply.

However, upside is likely to be capped by slack demand in processed chana and besan due to availability of cheaper alternatives like Matar dal and Tevda dal. Also, acreage under chana this season is expected to rise 15-20%, which is also likely to weigh on prices going forward.

Overall, the current fundamentals suggest that a temporary rise in prices can't be ruled out, however one should keep a close eye on sowing, which is expected to rise this season followed by new chana crop imports from Australia followed by domestic demand.