Business Daily from THE HINDU group of publications
Wednesday, Aug 09, 2006
Agri-Biz & Commodities - Climate & Weather
Urad futures rise on fears of damage to crop
Tough times Many places in Maharashtra have experienced heavy rainfall in the past five days and more rainfall could result in significant crop damage Trade sources predict there could be a shortfall of around 1.75 lakh tonnes in urad production
Chennai , Aug. 8
Urad (black matpe) futures price has increased by nearly five per cent since the beginning of this week on fears that heavy rains in Maharashtra, Gujarat and Andhra Pradesh could have damaged the kharif crop.
"Six districts in Maharashtra have been badly affected by floods. Of these, some are ones where urad is grown as kharif crop. There are also fears that floods in Telangana in Andhra Pradesh could have affected the crop. Also crop in Barauch district of Gujarat is threatened by the floods," said trade sources.
Urad August contracts on Tuesday were quoted at Rs 2,945 a quintal against Rs 2,823 on Saturday. Similarly, September has increased to Rs 2,690 (Rs 2,530), October to Rs 2,447 (Rs 2,320) and December to Rs 2,445 (Rs 2,317).
Kotak CSL Research said fears of shorter than expected supply was the reason for rally in urad prices. "In Maharashtra, particularly in the growing areas of Nanded, Parbhani and Latur have experienced heavy rainfall in the past five days. Given the important acreage figure commanded by Maharashtra, the threat of crop damage looks very significant," it said. "Urad, in our view, is heading for a tough period. We expect prices to rule firm," said trade sources.
`Not yet alarming'
However, Kotak CSL Research said: "We feel that the situation is not yet that alarming. Truly, if the rains continue and a flood situation happens, then we face a significant crop loss and that justifies the price rise. However, if the rainfall stops from this point in time and weather improves, that creates a case for improved yield from the same areas - which should bring the prices down in anticipation of improved supplies."
Mr K. C. Bhartiya, President, The Pulses Importers' Association, said there was no confirmation yet of any damage to the crop. "Basically, it is the fear of the damage that is pushing up the prices," he said.
According to trade sources, if the fears turn true, there could be a shortfall of around 1.75 lakh tonnes in urad production. The average annual production of urad in the country is 10 lakh tonnes and Maharashtra accounts for 4.5 lakh tonnes. The areas that have been feared to have been affected by rains in the State account for 40 per cent of the production. According to Kotak CSL Research, Maharashtra accounts for 27 per cent of the total acreage under urad in the country during the current kharif season. Madhya Pradesh (26 per cent), Uttar Pradesh (15 per cent), Karnataka (8 per cent) and Rajasthan (7 per cent) make up the rest.
"Fortunately, the crop in the rest of the States is said to be safe," trade sources said.
"Urad prices had showed a tendency to decline after the Centre banned exports and announced it would import pulses to meet demand. But the rains have changed the scenario," trade sources said.
However, not much of urad or any other pulses is finding its way into the country through imports.
"Small quantities of pulses are coming into the country," said Mr Bhartiya.
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