Chana markets were able to sustain firm last week. Buying interest started emerging from major trade centers after few downward revisions, last to last week. The spot markets have turned fairly valued now and the market responded to this factor. The farmers are bringing in lesser quantum for sale in the mandis currently, in anticipation of getting better returns for their produce. As such, arrivals are despite the new crop supply period.
Earlier there were expectations of arrivals to intensify May onwards but tightening of lockdown restrictions has resulted in limited supplies in the mandis. This factor has also contributed in favoring an upward price movement.
Estimations of a lower crop size against previous estimates and a lower carry over inventory for this year shall continue supporting the spot as well as the derivative markets moving forward. Unless the arrivals are seen in decent number, we may not see any sharp reversal of the upward trend in forthcoming weeks. As the carry forward inventory till March end was lesser over previous year, markets will constantly attracting stocking interest after moderate price fall.
Following the second wave of Covid-19, a few state governments including Rajasthan, Kerala and Uttarkhand have recently asked the centre to restart distribution of free food grains to 810 million poor people under the Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) scheme. This scheme was launched last year during the first wave of the pandemic. Under this, the centre had distributed 5 kg rice or wheat per person and one kg of pulses per family covered under the National Food Security Act from April- November 2020.
Last year the government had allocated 32.2 million tonnes of food grains free of cost at the financial cost of Rs 1.22 lakh crore in addition to Rs 12,000 crore spent for the distribution of pulses and chana under PMGKAY scheme. In case the scheme gets implemented again then it would imply that the government shall purchase additional quantity of chana from the open market, leading to better profit margins for the traders or farmers, as this will help in keeping prices firm.
As per the existing market factors and Mandi talks, it is quite likely that Rs 5150-5200/qtl can be the bottom price of the NCDEX grades of chana, for the month of May.
