MUMBAI Prices of pulses in India, the world's largest producer and consumer of the commodity, may surge as much as 20% in the next three months due to higher seasonal demand and low supplies, industry officials said Friday.
The retail price of pigeon peas is currently quoting at 85 rupees ($1.76) per kilogram, black matpe at 80 rupees/kg and green gram at 70 rupees/kg. These rates have already increased 21%-42% in the last two months.
Supplies are low because of a fall in production last year due to erratic rains in the states of Maharashtra and Karnataka, the key growers. India produced 14.66 million metric tons of pulses in the fiscal year that ended March, down from about 15 million tons in 2007-08, while the country annually consumes 17 million-18 million tons.
"The new crop will start arriving into the market only from November onwards," said Chowda Reddy, an analyst with Karvy Comtrade. "Till then, the current stocks are not sufficient to meet the demand."
Pigeon pea and Black matpe are sown in June-July and harvested by November.
Demand for pulses typically increases in the next three months because of a string of Hindu festivals, in which people exchange sweetmeats and confectionaries as gifts. Many varieties of pulses are ground to make some of these sweets. They are also used in a variety of meal preparations. The August-October period typically accounts for almost 40%-45% of total consumption.
"Demand for pulses is likely to rise during the August-October period due to the several Hindu festivals," said K.C. Bhartiya, president of the Pulses Importers' Association.
India's ongoing weak annual monsoon rains may pare output from this year's crop as well, limiting supplies and reducing the possibility of a softening in rates.
"Weak monsoon may affect the sowing of summer-sown pulses and production could decline 5%-10% from last year," Mr. Bhartiya said. As a result, supplies will remain tight next year as well, he said.
India's annual monsoon rains were 19% below normal during the June 1-July 22 period, according to the India Meteorological Department.
The government doesn't maintain buffer stocks for pulses as it does for rice and wheat. So contracting imports now may not immediately help in easing supplies because it will take some time for the cargoes to hit the market, said Madan Sabnavis, chief economist with the National Commodity and Derivatives Exchange.
India has negligible carry over stocks of pigeon peas and black matpe, said Satish Mittal, a Maharashtra-based trader.
The country's pulses imports may rise to 3 million tons in 2009-10 from 2.3 million tons last year, industry officials said. India imports pulses mostly from Canada, Myanmar, and the U.S.
Source : The Wall Street Journal