Chana prices stay above MSP as farmers hold on to produce
After remaining subdued for some time, the price of chana (gram) has gone above the minimum support price of ~4,000 a quintal in wholesale spot markets.
Looking at the projection of chana production for 2016-17 at more than 9 million tonnes, the rise in prices has been cheerful for farmers.
Traders give two reasons for this. First, output is likely to be lower than the government estimate of 9.08 million tonnes, according to the third advance estimate, and, secondly, farmers and traders who had purchased chana when prices were high are holding on to their stocks in anticipation of a rise in prices in the peak inflation months of June to September.
Chana is one of India’s most widely-grown varieties of pulses and is cultivated primarily during the rabi season. For farmers who have been facing trying times for the past few months due to a bumper harvest and sharply falling open market prices, the slight recovery spells good news. Some traders say uncertainties over the 2017 southwest monsoon are keeping prices firm.
According to the Agmark data, the average spot market price of chana in the country had been around ~4,000 per quintal in February-March but started improving slowly from April.
“Prices have marginally recovered from the lows recently. The overall arrival has not been strong and farmers are holding back chana stocks to sell later. The pipeline inventory was at a historic low; so whatever production increases have taken place have replenished the inventory. This price recovery is sustainable. We expect prices to firm up during July-October,” Pravin Dongre, chairman, India Pulses and Grains Association (IPGA), told Business Standard.
The IPGA expects the chana crop to be higher than last year, but nowhere close to the record production the government is talking about. Anuj Gupta, head of research, commodities and currencies, Angel Commodities, said, “Chana prices have been moving up for the last few days in the physical markets due to the expectation of a normal monsoon. When the price was lower than the MSP, farmers were not willing to sell below the MSP and hence there was lower supply in physical markets.”