On NCDEX, chana futures traded bullish in September but prices have corrected in October.
Chana is a rabi pulse sown during the months of October to December largely in Madhya Pradesh, Rajasthan and Uttar Pradesh. The crop is harvested from February to April.
Sowing depends on the winter conditions as cooler temperatures with good water content in the soil improves the yield. Prices, too, play a significant role in determining the area under cultivation. Higher prices are announced to encourage sowing as lower rates can lead to farmers switching to crops such as mustard, wheat and maize.
While 80-85 percent of the crop is desi chana remaining 15-20 percent is chickpeas or chole, Other states that grow desi chana are Gujarat, Karnataka, Haryana and Maharashtra.
On NCDEX, chana future traded bullish in September but prices have seen some correction in October, closing at Rs 5,431 per quintal by October 15. It is 9.72 percent higher compared to Rs 4,903 per quintal reported on August 31. Lower supplies and increased demand in the domestic markets during the festival season brought long accumulation in NCDEX chana futures.
NCDEX chana prices also started to witness uptrend as NAFED continued to procure high amounts after the government declared stimulus package for the agriculture sector.
For the month ahead, NCDEX chana futures is estimated to remain bullish due to higher buying of besan and chana dal, lower imports and declining carry forward stocks from last year (2019-20).
Imports of chana and chickpeas from Australia and Canada are expected to be lower this year (2020-21), as India is moving towards becoming more self-reliant to improve domestic production.
Imports from Australia during the Indian chana sowing period (November-January) are expected to be lower this season, which could create a supply tightness in the domestic market.
The government has also raised the MSP of gram (chana + chickpeas) to Rs 5,100 per quintal (2020-21) from Rs 4,875 per quintal in previous year.
Monsoon and yield reports of the kharif crops also play a critical role in determining the movement of the agricultural commodities. It will eventually be the key to determine the sowing of the rabi crops during the later winter season. However, continued rainfall beyond September could damage crop and delay sowing.
Chana supplies to the local mandis has been reportedly lower with higher festive buying till Diwali, which is also expected to support upside movement in the spot and future prices. Overall, we expect a bullish trend in NCDEX chana Futures for the month before the beginning of the peak sowing season in late November.
(Sumeet Bagadia, Executive Director at Choice Broking.)Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.