The Indian government’s first advance estimate pegged has chickpea production at 8.66 million tonnes, while the trade pegged it somewhere between 7.7 and 8.20 million tonnes, down by about 2.48 per cent from last year’s 8.88 million tonnes (first advance estimate 2014). There are two main attributes for the fall are marginal drop in seeded area expected due delayed kharif harvest and marginal shifting of crop area to oilseed crops in Rajasthan and Madhya Pradesh.
Domestic Balance Sheet (Unit: Million MT)
Figures in * are NCML Estimates based on traders view
Chana Price Seasonality
The price seasonality index for Chana at Delhi indicates that with new crop arrival prospects in the next couple of months, prices start to decline from January onwards. With exhaustion of peak arrivals by the end of April, prices start to gradually march northwards because of good demand for domestic consumption. With subdued demand, the prices cool towards August and In September arrivals touch their trough. Increase in demand for Chana for seed purpose towards the end of September and festive demand keeps the prices northwards, peaking in September and remaining steady in October. During November prices start to decline on anticipation of the new crop and disposal of old stocks for replenishing them with the next crop arrivals.
The chickpea prices closely follow the seasonal patterns, wherein they start declining at the time that harvesting commences and bottom out as harvesting reaches its peak.
Thus, it can be used as a significant tool in deriving the price trend. Though harvesting starts in the month of January in the case of chickpea, the actual arrival pressure for the crop builds only after February, when harvesting commences in Madhya Pradesh. Accordingly, chickpea prices begin falling from February onwards and bottom out in May, when arrivals from Madhya Pradesh and Rajasthan reach their peak. Thus, as per the seasonal pattern, if the demand supply scenario remains favorable, selling in February and buying in May is advisable for chickpea.
Chana Supply & Demand Dynamics
Under normal growing conditions, pulse demand in India will continue to expand at about 8.72 million tonnes a year. Price and income elasticity of demand will of course play a role, but demand will continue to rise into the foreseeable future. India’s pulse import volumes will be a function of the shortfall between aggregate domestic production and demand. In the past three months, the domestic price of pulses has risen sharply, raising concern in government circles and suspicion of large-scale stock building by some major players. There is risk of the government imposing restrictions on futures trading in desi chickpeas.
It is common knowledge that con¬sumption demand for a range of food products, including pulses, is driven up by India’s rising incomes, low per-capita consumption, and population pressure. Two other factors also deserve attention – the expansion of overall farm production and higher support prices for the related pulses.
India and Global Chana Updates:
• Contrary to Government estimate, chana output this rabi season is expected to be lower at 6.5 million tonnes (mt), according to trade estimate at the Pulses Conclave 2014 held in Goa. This was largely due to unusually cold weather and overestimate of pulses acreage. Earlier, the government has estimated a bumper chana output at 9.8 mt this year against 8.88 mt harvested in the same period last year.
• An important fact to highlight is that the chana prices have fallen below the minimum support price and the quantity of Government’s pulses purchase at MSP is low and is not sufficient to protect farmers’ interest. Chana prices in the wholesale market has fallen to Rs. 25-27 a kg against the MSP of Rs. 31 a kg.
• Spells of heavy rainfall has destroyed hopes of farmers in Madhya Pradesh, which has been receiving torrential rains in the wheat and chana region. According to farmers welfare and agriculture department, hailstorm struck 640 villages in 18 districts of the state. Hailstorm struck 93 villages in Seoni district, 90 in Dewas, 80 in Raisen, 72 in Umariya, 57 in Neemuch, among others.
• According to Australian Bureau of Agricultural and Resource Economics and Science, production of Australian Chickpea is estimated down by 23 percent at 629,000 MT against 813,000 MT from last year.
• In its latest monthly review of Canadian chickpeas Agriculture Canada's market analysis branch in Winnipeg updated forecasts for 2014. It thinks chickpea production this year will total 130,000 MT from 173,000 acres, compared to 182,000 MT from 198,000 acres in 2013. It is important to note that Agriculture Canada does not survey growers and its forecasts should not considered official. Agriculture Canada forecasts exports will reach 85,000 MT in 2014-15, compared to 55,000 MT this season. Domestic use is forecast at 58,000 MT in the coming marketing year, versus 65,000 this season. Season ending stocks are forecast to finish the 2014-15 marketing year at 120,000 MT, versus 125,000 this season and 54,000 MT last season.
Recommendations: (NCDEX)
The market is expected to find first strong support at the levels of 2750-2800 and has good potential of reaching 3400 and 3900 on the higher side (Time Horizon: Till mid of August 2014).
