Chana showed a continuous rising trend during the month of July .A few factors were responsible for this. The rates had fallen to very low levels and there were expectations of recovery in prices from these levels as stockists were reportedly waiting for prices to rise before releasing stocks.

The domestic demand too picked up at the lower levels. In the Futures market, short covering was also noted as the spot rates remained firm in the mandis. Most traders expect that the effect of higher production aspects have been incorporated and they apprehend the levels seen during the month of June are very low.

The main factor for the coming month could be an expected rise in demand from the festival season ahead in the next few months. That is expected to provide some support to the rates. Higher stocks and prospects of better production could however pressurize the rates further. Concerns over rising inflation and any steps by Government could also have some bearish impact on the prices.

Good rainfall activities over the growing areas for other Pulses like Tur, Urad and Moong could have a beneficial impact on the production aspects for those crops and that too could add some pressure on rates for Pulses. Government initiatives of importing Pulses too could control the upside movement.

The recent announcements of increase in MSP for Tur and Urad created expectations of farmers going more for sowing of these Pulses this year. Latest reports of indications of a rise in Pulses acreage by 7­8% is also likely to keep prices slight down not only for Chana but also other Pulses like Tur and Urad whose rates shot up significantly last year.

The area under Tur and Urad is expected to rise more as farmers reportedly got good returns last year. The 4th Advanced Estimates of crop production for Year 2009­10 puts Pulses production at 14.59 million tonnes against annual demand of 17­18 million tonnes. Chana production is estimated higher at 7.35 million tonnes vs 7.06 million tonnes last year

The coming month could witness some high volatility based on these many factors that would impact the price movement for chana. Volumes have risen to very high levels and increased trading activities too have been noted for the commodity in the month of July.

Technical look moderately bullish in the near term. Demand in the mandis remains an important factor that could support the prices at the lower levels. Production in other Pulses however also remain critical as any positive report on that aspect could pressurize the rates to some extent. Higher stocks could also prevent a major upside for the the commodity

Courtesy: Religare Commodities

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