Informist, Friday, May 19, 2023
By Priyansh Verma and Arunima Bharadwaj
NEW DELHI – The low availability of pulses, primarily tur, in the domestic markets and concern about El Nino are likely to put upward pressure on domestic prices, industry players said.
Traders and experts believe the wholesale prices of pulses are likely to move up in the coming months owing to supply constraints.
Tur is sold at 9,450 rupees per 100 kg in benchmark market of Akola in Maharashtra, way above the minimum support price of 6,600 rupees per 100 kg. The current spot price at Akola is 51% higher than 6,250 rupees a year ago, according to Informist data.
Considering that the new crop will only start arriving after kharif season and looking at the low supply of tur, prices are expected to touch the level of 9,600-9,800 rupees per 100 kg by the end of June, said a commodity analyst.
The usual arrival of the crop around this time of the year is 25,000 bags (1 bag = 100 kg), said Laxmi Narayan, an Akola-based trader. "However, we are receiving arrivals of only 2,500 bags."
One of the main reasons for the lower availability is the sharp decline in output in the current crop year ending June.
According to the agriculture ministry estimates, tur output in 2022-23 crop year (Jul-Jun) is projected to decline 13.1% on year to 3.67 mln tn.
Market participants, however, project the actual tur output this year to be even lower at 3.0 mln tn. Tur accounts for about 50% of India's pulses production during the kharif season.
The agriculture ministry has projected India's overall pulses production in 2022-23 at 27.81 mln tn, up 1.9% on year from 27.30 mln tn last year.
Besides tur, urad production is also projected to decline this year. According to the ministry estimate, urad output in 2022-23 is estimated at 2.68 mln tn, down 3.4% from 2.78 mln tn a year ago.
Urad prices, too, have been rising. The pulse was sold at 9,370 rupees per 100 kg in key market of Latur in Maharashtra, sharply higher than the minimum support price of 6,600 rupees, traders said.
Urad prices are expected to rise by 500 rupees per 100 kg by June end, according to a commodity research company.
Among other pulses, prices of moong and masur are expected to remain stable for the coming months with marginal movement, traders said. Moong is presently being sold at 7,000-8,500 rupees per 100 kg at Rajkot in Gujarat and masur at 5,350-5,400 rupees per 100 kg at Lalitpur market in Uttar Pradesh.
An uptick in prices of pulses is likely to put upside pressure on CPI inflation, which fell below the 5% mark for the first time since November 2021, in April.
Data released last week showed, India's CPI inflation moderated to an 18-month low of 4.70% in April from 5.66% in March. The decline in the headline print was mainly due to the statistical effect of high base.
The pulses and products' index, carrying a weight of 2.38% in CPI rose 1.3% on a month-on-month basis in April. The inflation rate of the index was at an 18-month high of 5.28% in April, reflecting increasing of price pressures.
The upward pressure on prices seems to be continuing in May as well. According to the Department of Consumer Affairs data, tur prices have so far averaged 10,824 rupees per 100 kg in May, up 1.6% month-on-month and urad prices have averaged 9,868 rupees per 100 kg, up 0.9% on month.
"A 1% increase in pulses prices tends to increase headline CPI 0.02 percentage points," IDFC FIRST Bank's Economist Gaura Sen Gupta said.
"Rising inflation in pulses is largely seen in tur dal," said Prithviraj Srinivas, chief economist at Axis Capital. "In the past, shortfall in pulses, like in 2019-20, led to a 39% year-on-year increase in imports and a 16.5% year-on-year increase in prices."
Imports of pulses, in value terms, were up 64% year-on-year in April.
With prices on the rise, the government today issued an advisory asking importers not to hold stock of tur and urad beyond 30 days from the date of customs clearance.
"Looking ahead, inflation in pulses is expected to peak by the end of the June quarter at 14-15% year-on-year if prices hold at current levels," Srinivas said.
Experts are also worried about the possibility of below normal monsoon due to El-Nino conditions, affecting kharif pulses production.
"Area under tur and urad this year is expected to increase due to high prices of the two pulses in the domestic market presently," said a Delhi-based commodity analyst. However, if the monsoon is below normal, productivity is likely to be affected, the analyst said.
India Meteorological Department has projected southwest monsoon rainfall to be normal this year at 96% of the long period average though a moderate El-Nino is likely to develop in the second half of the season.
El Nino, an abnormal warming of surface ocean temperatures in the eastern tropical Pacific, is usually associated with lower rainfall in India.
"Even as pulses inflation is higher compared to last year, there is scope for prices to rise in case we have poor monsoon given these are mainly grown in parts of country that are less insulated from spell of bad rains," said Abhishek Upadhyay, senior economist, ICICI Securities Primary Dealership. End
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