ventura commodities pvt.ltd. special report on … · 2008-02-14 · ventura commodities pvt.ltd....

Thursday, February 07, 2008

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VENTURA COMMODITIES PVT.LTD.

SPECIAL REPORT ON CHANA Introduction

Chana is an important pulse crop in India, belongs

to Leguminosae Family, and is also known as

garbanzo beans. Chana is a rich source of high-

quality protein. There are two commercial types of

Chana, Desi and Kabuli, which are divided

according to seed size and geographic origin. The

Kabuli types have a large seed and are of

Mediterranean and Middle Eastern origin. The Desi

types the main variety of India has a smaller seed

and is of Indian origin. Desi chana accounts for

about 85% of world production, while Kabuli Chana accounts for 15% of production.

Growing Area

Chana is a semiarid-sub tropical crop widely spread in the states of Madhya Pradesh,

Maharashtra, Uttar Pradesh and Rajasthan. Chana are well adapted to the drier parts of the

brown and dark brown soil zones. They do not tolerate poorly drained or saline soils. The Chana

is widely grown in Indian sub-continent which accounts for almost 90% of the world's crop.

Cropping Season

Chana is an important Rabi crop mainly sown in September -November and harvested in

February. Sometimes, it is also grown as a regularly or partially irrigated crop. It is best suited

to areas having low to moderate rainfall and a mild cold weather. Excessive rain soon after

sowing or at flowering does great harm. Severe cold is injurious, and is very harmful.

Hailstorms at ripening cause much damage. It is best suited to areas having

moderate rainfall of 60-90 cm per annum.

Grown as the sole crop of the year, chana is rotated with jowar, bajra, wheat, and coriander

and occasionally rice. When taken as a second crop in the same year, it follows an early crop of

sesame, fodder jowar, maize, guar, kar, ragi, or coriander. Irrigated chana in the south is



rotated with garden crops, such as onion and sweet potatoes, or with irrigated wheat, jowar or

rice. Chana is grown alone or mixed with wheat, barley, linseed, safflower or mustard. In mixed

crops, chana does well when rainfall is low, whereas other crops fare better when rains are

adequate or abundant.

Minimum Support Prices (MSP) for Pulses

Crop Year 2003-04 2004-05 2005-06 2006-07 2007-08 MSP in Rupees per 100 Kg

Pigeon pea 1,360 1,390 1,400 1,410 1,550 Mung beans 1,370 1,410 1,520 1,520 1,700 Black matpe 1,370 1,410 1,520 1,520 1,700 Chickpeas / Chana 1,400 1,425 1,435 1,445 1,600 Lentil 1,500 1,525 1,535 1,545 1,700

Source: Ministry of Agriculture, GOI.

Production in India

Production in Million Tons

0

1

2

3

4

5

6

7

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

India is the major producer as well as consumer of Chana in the world. From last decade till

2006 Chana production in India varied between 4.2 Million tons to 5.8 million tons. Boom in

production was noted in the year of 1994-95 with a production of 6.44 Million tons. The

production lowered in the succeeding years but maintained a slow pace of growth in production

till 2006. During the past 30 years, the Chana area has remained stagnant but the production

has increased from 4.2MT (during 1990) to 5.88Million Tons (during 2004) because of increase

in productivity from 614 to 735 kg per hectare during this period. The gram area and

production marginally declined from 5.1 Million tons to 3.9 million tons from 1999 to 2000

because there was severe drought in several parts of India in years 2001 to 2003.



Area Production Yield of Chana

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Year

'000 h

a

600

650

700

750

800

850

900

'000 Tons

kg/h

a

Area Production Yield

State Wise Production of Chana

State 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 In ‘000 Tons

Madhya Pradesh

2408.2 1713.4 2584.9 2548.9 2371.2 1674

Maharashtra 450 449 421 466 705 1046

Rajasthan 735.5 340.6 707.2 773 478.9 808Uttar Pradesh 817 779.1 787.1 672.2 660.6 825

Karnataka 281.6 251.9 171.1 224 229 406Andhra Pradesh 363 382 457 345 627 628

Gujarat 27.2 28.9 132.3 98.5 142 204

Others 390.5 291.9 456.9 341.8 361.7 571

India 5473 4236.8 5717.5 5469.4 5575.4 6162

Madhya Pradesh is the major producer of chana in the country. However the area declined last

year followed by higher returns from other commodities such as wheat and masur.



2006-07

Madhya Pradesh28%

Maharashtra17%

Rajasthan13%

Uttar Pradesh13%

Karnataka7%

Andhra Pradesh10%

Gujarat3%

Others9%

Marketing Channel for trading of Chana



Uses and Consumption Pattern Chana is the most widely produced and consumed pulses in India. About 80% of the Desi

Chana produced are split in half to make Chana Dal, and 80% of this split form are ground into

a flour called ‘Besan’ and rest part is consumed for other food products like green vegetable

and cattle feed.

Chana is a rich source of protein especially for the vegetarian community of India. Chana is

valued for their nutritive seeds that have protein content ranging from 25 to 29%.

Chana seeds are eaten fresh as green vegetables, parched, fried, roasted, broiled, in snack

foods and condiments, and their flour Basen(made by grinding Chana) can be used as soup,

dhal, and to make bread. Small amounts of Chana are also used for livestock feeds.

The use of Desi chana is follows:

1) Dal: used in accompany with chapatti and rice

2) Snacks food: prepared by heating, toasting (parching) is traditional household items, consumed with cereals.

3) Namkeen: Besan prepared from chana is widely used in making pakoras, kadhi, namkeens and many dishes.

3) Sweets products: Besan is the chief ingredients along with ghee, sugar and day fruits used to make many items of Indian confectionaries.

4) Sattu: parched chana is used for making various kind of saatu which is consumed for culinary purpose.

5) Salad and sprouts: sprouted chana and green salad of chana is widely appreciated for health food that is rich of vitamins and minerals and less in fats.

6) Medicinal use: Chana leaf extracts is rich for malic acid, is sometime used in medicine.

7) Animal feed: The plant part is used for animal feed which have high nutritional value and it is important source of horse feed.



World Chana Production:-

Chana, the world's third most important food legume, is currently grown on about 10 million hectare worldwide, with 95% cultivation in the developing countries.



2006-07* Canada2%

India65%

Others7%

Ethiopia2%

Myanmar3%

Mexico3%

Iran3%

Pakistan5%

Turkey6%

Australia4%

India along with World in Chana Production

India is at number one position in the world in Chana production accounting almost about 65 %

of the world’s production every year. The other countries in ahead in Chana production are

Pakistan, Turkey, Iran, and Myanmar. In the year 2003-04 India’s production was 5.8 million

tons which was nearly 70% of the total world production.

Production In '000 MT

0100020003000400050006000700080009000

10000India World

India 4240 5720 5470 5650 5700

World 7085 8721 8333 8832 8650

2002-03 2003-04 2004-05 2005-06 2006-07*



World Import/Export Scenario

World Chana Imports 2004India18%

Others39%

Italy4%

Algeria7%

Spain8%

Pakistan10%

Bangladesh14%

World Chana Exports 2004

Iran13%

Mexico12%

Pakistan3%

Canada10%

Tanzania4%

Syrian 4%

Others12% Australia

22%

Turkey20%



Australia and Turkey leads the export of chana. However recent droughts in Australia have

affected the production vis-à-vis exports of chana from the country.

India leads the import of world chana; majorly from Australia. Exports from Pakistan have been

variable, but following the severe drought the Pakistan Government has banned the exports of

pulses from the country.

Exports from India has been banned in June 2006

India Import/Export Scenario

India imports modest quantity to fulfill domestic pulse requirement and export little quantity of

Chana only to such countries, where population of Indian origin resides. The country to which

India exports is USA, UK, Saudi Arabia, UAE, Srilanka, Malaysia etc. India imports from

Myanmar, Tanzania, Iran, Canada, Pakistan, Turkey etc.

IFY 2002/03 2003/04 2004/05 2005/06 2006/07 Country Metric Ton

AUSTRALIA 12,538 44,476 13,917 58,350 74,882

IRAN 57,026 32,208 56,455 30,509 0

MYANMAR 35,459 62,550 21,725 17,597 25,710

PAKISTAN 75 25,683 425 122,316 22

CANADA 59,810 50,055 10,251 4,986 7,982

Other 52,646 44,269 30,103 47,998 18,722

Total 217,553 259,239 132,875 281,756 127,318 Although India used to remain a net importer, it used to export small quantities of chana.

Consumption

Despite large imports, India’s per capita pulses consumption has been declining due to stagnant

production and a rising population. Various pulses varieties are consumed according to regional

preferences.

Indian consumers are price sensitive buyers and higher prices of pulses relative to substitute

foods have contributed to the decline in pulse consumption despite rising incomes. In the case

of middle and low income consumers, relatively high pulse prices appear to shift consumption

toward lower cost cereals and vegetables. Among higher income consumers, a shift away from



pulses may be due to preferences for vegetables, fruit, dairy products, and meat, as opposed to

price.

The average growth rate for pulse production and consumption during the period 2003 through

2006 was estimated at -1.96 percent and +3.41 percent respectively. Thus, India will have

to import large quantities of pulses in the coming years to bridge the supply/demand

gap.

Net availability of food grains (per annum) in India from 2001-2006

Rice Wheat Other

Cereals Cereals Pulses Per Capita Foodgrains

Kilograms per capita per year

2001 69.5 49.6 20.5 141 10.9 151.9

2002 83.5 60.8 23.1 167.4 12.9 180.4

2003 66.2 65.8 17.1 149.1 10.6 159.7

2004 71.3 59.2 25.3 155.8 13.1 168.9

2005 64.7 56.3 21.7 142.7 11.5 154.2

2006 72.3 56 22.1 150.4 11.8 162.3 Source: Directorate of Economics and Statistics, Ministry of Agriculture, GOI

Pulses Imports May Touch Three Million Tons

India, which has faced a shortage of pulses for the last few years, is likely to import thee million

tons in IFY 2007/08 (Apr-Mar) to meet the growing domestic demand.

In a bid to contain the rising prices of pulses, the government has entered the global market to

import the commodity. Public sector trading companies STC, MMTC, and PEC along with the

cooperative Nafed have contracted to import 1.1 million tons of pulses since April 2007. These

firms would be able to import the targeted 1.5 million tons of pulses by the end of this financial

year (March 31, 2008).

Rising prices a cause of concern to the government The production shortfall and rising international prices have caused domestic pulse prices to

rise sharply in recent years. From 2003 through 2006, the wholesale price index (WPI) of

pulses rose by 45.6 percent while the WPI for cereals rose by only 12 percent (Annexure 1).

Most of the increase in pulse prices is accounted by chickpeas, black matpe, and mung beans,

whereas the price increase in pigeon peas and lentils were smaller.



Pulses prices rising sharply

Trend in Wholesale Price Index

100.0

130.0

160.0

190.0

220.0

250.0

280.0

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07*

Years

Index

Cereals Pulses Oilseeds

Source: Ministry of Commerce & Industry, GOI In order to contain the rising prices of pulses, the GOI took various policy decisions in recent years, which had only a marginal impact on prices. These include:

• The GOI recently launched a National Food Security Mission with the objective of producing an additional eight million tons of wheat, 10 million tons of rice and two million tons of pulses over the next four years.

• The GOI raised the minimum support price for the 2007/08 crop of pigeon pea to Rs.

1,550 per 100 kg and for mung beans to Rs. 1,700 per 100 kg from Rs. 1,410 and Rs. 1,520 respectively in 20006/07.

• In early 2007, the government banned futures trading in two pulses (pigeon pea and

black matpe).

• In order to contain spiraling prices of essential commodities, the Centre had restored the powers of state governments for imposing stock limits for pulses under the Essential Commodities Act, 1955. In August 2006, the GOI imposed stocks limits on pulses under the "Removal of (Licensing requirements, Stock limits and Movement Restrictions) on Specified Foodstuffs (Amendment) Order, 2006”. The Order barred wholesale dealers from keeping stocks above 200 tons and 5 tons for retailers.

• On June 27, 2006, the GOI notified the ban on exports of pulses, with the exception of

Kabuli gram following reports of crash in market prices.

• Effective June 8, 2006, the GOI exempted pulse imports from the 10 percent import

• The government had announced a 15 percent subsidy to public sector companies in their import bill of pulses.



Chana output estimate revised down

The country’s chana output may fall short of the earlier estimates by 10 per cent for the current calendar year.

The drop will be mainly because of decline in acreage and poor rainfall in the major producing regions of the country.

Recent severe cold weather in the country is likely to affect the yield of chana sharply down

Madhya Pradesh, the largest producer of chana, is expected to see a drop of over 20 per cent at less than 2 million tonnes against the average 2.4 million tonnes. Similarly, states such as Rajasthan, Maharashtra, Andhra Pradesh, Karnataka and Uttar Pradesh are likely to produce less crop.

The crop this year is expected to be around 5 million tonnes instead of the earlier estimates of 5.5-5.6 million tonnes. Reports say that output may even drop to 4.5 million tonnes.

The Indian Institute of Pulses Research had earlier predicted a 15-20 per cent drop in chana acreage.

The country is expected to have carry-forward stocks of less than 400,000 tonnes.

Arrivals from Karnataka, Maharashtra and Andhra Pradesh have already begun. Crop from Madhya Pradesh will start arriving within a fortnight, while harvesting in Rajasthan will begin in March.

The country consumes around 6 million tonnes of chana annually. It imports the commodity from Australia and Tanzania.

Production On A Decline

Estimated crop in 2008 (In Million MT)

Rajasthan 0.7-0.8

Madhya Pradesh 1.9-2.0

Maharashtra 0.5-0.6

Andhra Pradesh 0.4-0.5

Karnataka 0.4-0.5

Uttar Pradesh 0.2-0.3

Others 0.2-0.3

Market sources



Fundamental Review:

Spot prices of chana has touched the Rs.3325 per quintal in the year 2006; this was

followed by reduction in production due to unfavourable weather conditions in India and

lower production in Pakistan

Recent severe weather conditions have affected the yield of chana drastically

Weather conditions in Madhya Pradesh are expected to remain unfavourable for the next

couple of days

To compensate for the losses India will have to import more amount of the commodity,

which in turn will fuel the international markets

Any further deterioration of crop will boost the sentiments among traders as well as

stockiest

Government has already banned exports of pulses and is giving 15% subsidy on imports

of pulses; given this condition Government is left with no option to further suppress the

prices

If the production of chana remains below 5 Million Tonnes this would be the lowest

production since 2002-2003

Fundamentally if conditions remain unfavorable for the crop, spot prices currently

trading at Rs. 2400 per quintal are likely to touch Rs.2800 per quintal in near term and

subsequently may touch Rs.3200 per quintal



Technical Outlook:

NCDEX CHANA (CMP 2475; BUY) Support & Resistance levels (Weekly)

Support Resistance S2 S1 R1 R2

2250 2400 2650 2985

ALL TIME HIGH/LOW 3345/1427 MONTH HIGH/LOW 2495/2286 WEEK HIGH/LOW 2495/2334

21 WEEK SMA 2301 50 WEEK SMA 2288

RSI (14) 63



AFTER MAKING HIGH OF 3345 CHANA RETRACED UPTO 1985. CURRENTLY IT IS TRADING IN THE RANGE OF 2100-2475 RANGE. 2510 IS FIRST RETRACEMENT. TWO CONSUCATIVE CLOSE ABOVE 2510 CAN LEAD CHANA TO 2826-2985 LEVEL, WHICH CAN WORK AS POTENTIAL RESISTANCE. BUT TRADING ABOVE 2985 LEVEL CAN TEST PREVIOUS HIGH OF 3345. RSI IS IN NEUTRAL ZONE. MACD CROSSING ZERO LINE CAN BE ANOTHER POSITIVE INDICATION. Recommendation: BUY NCDEX CHANA FEB (NEAR MONTH) IN THE RANGE OF 2380-2410 FOR TARGET OF 2826, 2985 WITH A STOP LOSS OF 2125 (CMP 2493) OR BUY NCDEX CHANA FEB (NEAR MONTH) ABOVE 2512 FOR TARGET OF 2826, 2985, 3340 WITH A STOP LOSS OF 2250 (CMP 2493)



Annexure 1: Wholesale Price Index of Food grains for 2006-07

Commodity Weight 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07*

Food grains 5.01 173.8 172.4 174.3 176.3 177.5 187.0 205.9

(a) Cereals 4.41 173.0 170.1 173.5 176.3 177.9 185.8 199.3

Rice 2.45 167.5 167.0 166.0 168.8 168.2 174.5 179.6

Wheat 1.38 176.6 175.3 175.7 181.4 184.1 191.5 216.4

(b) Pulses 0.60 179.6 189.2 180.6 176.6 174.4 194.9 253.9

Chickpeas 0.22 139.2 170.3 149.7 142.5 137.1 157.0 208.0

Pigeon pea 0.13 150.3 142.6 157.5 172.8 179.3 170.8 182.1

Mung bean 0.11 186.9 205.6 208.0 195.9 187.4 219.2 302.8

Lentil 0.04 206.8 203.9 214.1 233.4 234.7 242.8 253.5

Black matpe 0.10 295.7 273.9 239.8 217.4 216.3 270.4 404.0

Food Articles 15.40 170.5 176.1 179.2 181.5 186.3 195.3 210.6 Non-Food Articles

6.14 146.5 152.9 165.4 186.3 187.6 179.1 187.9

Oilseeds 2.66 129.3 137.6 160.2 177.8 180.8 167.1 175.6

Edible oils 2.75 103.3 112.9 138.0 157.9 156.4 146.0 154.7

* Provisional

Source: Ministry of Commerce & Industry, GOI

Ventura Commodities Pvt. Ltd. Registered Office: Dhannur “E”, 15, Sir P.M. Road, Mumbai – 400 001; +91 22 2266 0969. This report is neither an offer nor a solicitation to purchase or sell commodities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the commodities mentioned in their articles. Neither Ventura Commodities Pvt. Limited nor any of the contributors accepts any liability arising out of the above information/articles. Reproduction in whole or in part without written permission is prohibited. This report is for private circulation.

ventura commodities pvt.ltd. special report on … · 2008-02-14 · ventura commodities pvt.ltd....

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