Moreover, chana futures on NCDEX plunged more than 44% in 7 months from 6,288 in September 2017 to 3,521 levels in April 2018 despite efforts by the government to improve chana price. Earlier to improve the domestic production and lowering the dependence of imports of chana, government has increased its Minimum Support Prices (MSP) to Rs. 4,400 per 100 kg.
In the calendar year 2018, chana futures made a positive move in March after 6 months of lower closing as government is trying to support prices by taking various steps like removing export restrictions and procuring at Minimum Support Price (MSP).
Earlier, in the season (December 2017), government withdrew customs duty exemption on chana and imposed 30% duty to restrict strict cheap imports. This increase was not sufficient to plug imports so government again hike import duty to 40% in February 2018 and then to 60% in March 2018.
However, due to rise in import duty, chana imports into the country slowed down since December last year as govt estimates 19% higher production at 11.1 million tonnes (mt) against 9.3 mt last year due to higher acreage and good weather. To support domestic prices of Chana, various states government is procuring at MSP as prices are much below the MSP. Madhya Pradesh, largest chana growing state, excluding chana from Bhavantar scheme and recently announces to procure about 21 lakh tonnes (lt) of Chana at MSP.
Meanwhile, centre also approved the procurement from Rajasthan, Karnataka, Andhra Pradesh and Telangana. Recently, Madhya Pradesh government started to offers 100 rupees/100 kg incentive on MSP for chana while Chhattisgarh also announced to give 1,500 rupees/quintal bonus to chana growers.
Earlier, Government of India has announced 7% export incentives for chana under the Merchandise Export from India Scheme (MEIS) for a period of three months till June 20, 2018.
“Chana futures are now trading at more than four and half year lows mainly due to higher stock positions with the stockists and heavy arrivals from the new season crop. Going forward, the chana prices is expected to improve and trade towards 3750-4,000 per quintal in medium term supported by increase procurement by the state government, improve in domestic uptake and slowing of imports. Moreover, lower level buying and prospects for export from the country will also support chana prices in coming weeks,” sai Ritesh Kumar Sahu (fundamental analyst– agri commodities), Angel Commodities Broking.