TREND:Traders bank on festival demand to drive rally in kabuli chana

Wednesday, Aug 26, 2020


By S. Anirudh Iyer and Animesh Deb


NEW DELHI – After months of subdued prices, kabuli chana traders are pinning their hopes on the ongoing festival season to further drive bulk demand for the commodity.


From 4,000-4,500 rupees per 100 kg in June, prices have moved up to 6,500 rupees ahead of a string of festivals across the country, and traders now expect prices to rise towards 8,000 rupees per 100 kg.


Indore-based trader N.K. Agarwal said prices have risen in the past fortnight, as the commodity it is used as an offering during Ganesh Chaturthi. He expects prices to rise further as demand is likely to pick up. 


Vivek Agrawal, head of Pune-based JLV Agro, expects kabuli chana prices to touch 8,000 rupees per 100 kg by October, primarily on the back of any positive development in terms of a vaccine for COVID-19, which may improve the demand outlook for pulses globally.


Since kabuli chana or garbanzo beans is classified as a premium product that is significantly consumed in restaurants, hotels, and food stalls, the outbreak of the pandemic led to a decline in mass consumption, so much so that market participants estimated a decline of 35-40% in demand this year. 


Industry estimates suggest domestic consumption of this variety of pulses at 265,000 tn this year, a sharp drop from 420,000 tn in 2019. 


Demand for all pulses, including kabuli chana, was on the rise in the initial days of the lockdown, as domestic consumers resorted to panic buying, but this dwindled after May as they had already stocked up in excess of their requirement. Additionally, the government started easing lockdown restrictions in phases across states from May, which brought down the need to hoard perishables. 


Hotels and restaurants, the key segment of demand for kabuli chana, remain under curbs or have limited operations. Stress on social distancing has also impacted out-of-home consumption of food items, further hitting demand for kabuli chana.


But with the onset of the festival season, kabuli chana traders expect demand to improve, driven both by bulk buyers and retail consumers, as relaxation of lockdown restrictions across the country gets more generalised. 


"Life is slowly getting back to normal. People are stepping out of their homes because hotels are resuming their business, which may also buoy demand for the coming two to three months, at least," said Harsha Rai of Mayur Global Corp.


While some traders say the impact of a rise in demand has already been factored in, with prices rising 700-800 rupees per 100 kg over the past few days, others differ. 


Jitu Bheda, chairman of India Pulses and Grains Association, said a gradual improvement in demand with easing of lockdown norms will boost the demand for pulses going ahead, especially in view of the onset of the long festival season.


The conflation of a recovery in bulk demand with a smaller crop in the 2019-20 (Jul-Jun) rabi season is also likely to contribute to the rise in prices. India's kabuli chana production is seen at 273,000 tn, against 395,000 tn the previous year, Navneet Singh Chhabra, director of The Shree Sheela International, said at a webinar organised by India Pulses and Grains Association. 


An important reason behind the steep fall in production of kabuli chana is farmers purportedly shifting to chana, traders said. While kabuli chana is not covered under the ambit of the price support scheme, chana fetches a minimum support price from the government, providing assured demand and price floor to farmers. 


The government has set the minimum support price for the 2019-20 rabi chana at 4,875 rupees per 100 kg, 200 rupees higher than the previous year. Production of chana is pegged at 10.2 mln tn in 2019-20, against 9.9 mln tn produced last year.  End


Edited by Mainak Moitra


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