With sky-rocketing food prices on one side, households are taking solace from chana prices coming down. While most pulses have seen an increase in price over the last three months, chana prices have dropped. The pulse crop’s price in Indore, one of the major trading centres of chana, has seen a sharp 17 per cent fall, from ₹5,200 per quintal in March to ₹4,300 per quintal by June.

Chana futures contract on the National Commodity and Derivatives Exchange are trading at ₹2,811 per quintal now. This is almost 18 per cent below the high of ₹3,416 recorded in March this year. One reason for this is the large increase in the crop output. Chana production in India increased 15 per cent in 2012-13 to a record 8.8 million tonnes. In 2013-14, the third advance estimates from the Indian Department of Agriculture showed that production will be even higher at 9.9 million tonnes, a 12 per cent increase from the previous year. This year, however, the production may be affected as farmers could shift to other crops due to low prices for their produce. This is a positive. Although there might not be a sharp rise in price, drawdown in the surplus could limit the downside for chana prices. As such, a price reversal could be on the cards for the crop in the coming months.

Outlook

Long-term view : The NCDEX-chana futures contract is in a strong downtrend since October 2012. However, this could be coming to an end. The contract is nearing a long-term trend line support level of ₹2,500. A break below this support might not be very easy for the contract. Having said this, the downside could be limited to ₹2,500. A reversal from here can take the price higher to ₹3,700 in the long term

Medium-term view : Here too, the trend for NCDEX-chana is down. However, there is a possibility of a double-bottom pattern formation visible on the weekly candle-stick chart.

Important resistance is at ₹2,930 and ₹3,000. A strong breach of these levels will turn the medium-term outlook bullish. Such a break can take the contract higher to ₹3,300 in the medium-term time frame.

On the other hand, the inability to break ₹3,000 can pull the price lower again towards ₹2,650, which is a significant support for the contract. A break below this support can take it lower to ₹2,500.

Short-term view : The NCDEX-chana futures contract has been trading in a sideways range of ₹2,650 and ₹2,930 for the short term.

Within this range, the contract has been moving higher now. The probability looks high for it to rise further towards ₹2,930, the upper end of the range.

A breach of this level will turn the outlook bullish and can take the contract higher to ₹3,000. On the other hand, failure to break above ₹2,930 will keep the sideways range intact and drag the price lower to ₹2,650, the lower end of the range.

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