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Price Outlook – Pulses NSEL Pulses Meet – 2008 Mumbai

Price Outlook – Pulses NSEL Pulses Meet – 2008 Mumbai. Ashok Mittal, Karvy Comtrade Ltd., Hyderabad. KARVY Comtrade Ltd. Incorporated on November 20, 2003 A wholly owned subsidiary of KSBL Member – NSEL, MCX, NCDEX and NMCE Also an active player in delivery based trading

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Price Outlook – Pulses NSEL Pulses Meet – 2008 Mumbai

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  1. Price Outlook – Pulses NSEL Pulses Meet – 2008 Mumbai Ashok Mittal, Karvy Comtrade Ltd., Hyderabad

  2. KARVY Comtrade Ltd Incorporated on November 20, 2003 A wholly owned subsidiary of KSBL Member – NSEL, MCX, NCDEX and NMCE Also an active player in delivery based trading Presently operating through 355 branches 400+ strong team exclusively for commodities

  3. Our Commitment to Quality Karvy Comtrade Ltd. is the first corporate commodity broker in India to be awarded the ISO 9001:2000 certificate

  4. Products & Services

  5. Products & Services contd…

  6. Our Research Coverage Magazine Karvy Comtrade’s “Invest & Harvest” Monthly articles Commodities & Derivatives Magazine Minerals and Metals Karvy the Finapolis Karvy Bazaar Baatein Daily reports www.thebulliondesk.com Our Reports are available on BLOOMBERG with key word KCTL <GO> & Reuters Knowledge Print & Electronic media coverage for Views on commodities Business Standard, Businessline, EconomicTimes etc., Newswire18, Bloomberg, Reuters, CNBC, NDTV Profit, Zee business etc.,

  7. Pulses - Overview • Main protein sources for large vegetarian Indian population • World production is almost stagnant around 60 million tonnes in last 7-8 years • Largest producers are India, China, Brazil, Australia, Canada and Myanmar • Major exporters are Australia, Canada and Myanmar • Major importers India, Pakistan and other developing countries • Developing countries especially South-Asian countries are major consumers • World trade is concentrated in South-Asia

  8. Indian scenario • India is largest producer, consumer and importer • Cultivated in all three seasons, mostly under rainfed conditions and very vulnerable to weather changes • Nearly 60 percent are produced in rabi season • Indian production which contributes to nearly 25% of global output, is almost stagnant at 12-15 million tonnes in last two decades • According to Assocham’s Pulse Production Report 2008, pulses production growth registered (CGAR) at 0.26% in last five decades • Average annual pulses output is 13.5 million tonnes from 1990

  9. Indian scenario contd… • Major producers are Madhya Pradesh, Maharashtra, Uttar Pradesh, Rajasthan, Karnataka and Andhra Pradesh • Indian pulses output touched ten years high of 15.11 million tonnes in 2007-08 • Annual domestic pulses consumption is 17-18 million tonnes • India is facing severe shortage of pulses since many decades and dependant heavily on imports • Per capita pulses consumption in India has fallen to 12.7 kg/year in 2008 compare to 27.3 kg/year in 1958-59 (Assocham’s Report)

  10. Indian scenario contd… • Imports have risen at CGAR of 10.38% in last three decades • Imports have touched 28 lakh tonnes in 2007-08 against 4.6 lakh tonnes in 1998-99 • India constitutes more than 20 percent total world annual import of about 10 million tonnes • The major exporters of pulses to India are Canada, Myanmar, and Australia about 40%, 27%, and 9% respectively of total imports • India exports negligible quantities of pulses and mainly confined kabuli chana

  11. Import of Pulses by India

  12. Pulses covered • Urad • Tur • Chana

  13. Urad ( Black matpe) • India annually produces about 10-12 lakh tonnes • Urad is cultivated both in kharif (70%) and rabi seasons(30%) • Major producers are Andhra Pradesh, Maharashtra, Karnataka and Uttar Pradesh • Major markets are Mumbai, Jalgoan, Delhi, Guntur, Chennai, Akola, Gulbarga and Latur • Domestic consumption is about 12-15 lakh tonnes and imports about 2-3 lakh tonnes every year

  14. Urad contd … • Mainly used for food preparations especially in southern India • India faces huge shortage of produce and depends on imports • Myanmar is largest exporter of urad and it exports more than 60 percent of its output • It produces about 4-5 lakh tonnes annually • Major urad producing countries are Myanmar and middle east • Domestic prices are mostly influenced by prices in Myanmar

  15. Urad production in India Source: Agriculture Department

  16. Urad Price Analysis • Factors influencing– • Area & production in both India & Myanmar • Weather factors in kharif & rabi seasons • Import consignments from Myanmar (June – September) • Price review • Prices made all time high of Rs4500 per quintal in November 2006, but fell sharply Rs2200 within few months • In 2008, prices moved in the narrow range ofRs2200-3000

  17. Urad Price Outlook • Prices Outlook for 2009 (Current price Rs2400-2500) • Medium term: Bearish- Dec 08- Mar09 – Rs2200 • Long term: Bullish- April – Sept – Rs 3200-3500 • Supportive factors • Kharif output estimates down by 28.7 percent to 8.2 lakh tonnes (Agriculture Department) • Higher MSP for 2008-09 – Rs 2521 per quintal • Myanmar crop situation – current stocks around 1-1.5 lakh tonnes and next crop will come March – April and expected to be normal

  18. Urad Prices Source : Bloomberg

  19. Tur (Red Gram) • Second largest pulse produce in India and grown in kharif season • Two major kinds are Red tur (Lal) and white tur • It is sown in June-July and harvested in Dec – Jan • India produces about 20-25 lakh tonnes annually with an area of 35 lakh hectares • World average annual output is 30 lakh tonnes with an area of 45 lakh hectares • India is largest producer and constitute 75 percent of world output and other major producing countries are Myanmar and few African countries

  20. Tur contd… • India still import 3-4 lakh tonnes annually most of which comes from Myanmar • Annual domestic consumption is more than 28 lakh tonnes • Major producers are MH (35%), UP(14%), KA(11%) and AP (7%) • Major trading centres: Mumbai, Akola, Latur, Gulbarga, Delhi and Tandur • Turdal is used in various food preparations and major ingredient in Indian foods

  21. World Tur Area, Production and Yield Source: FAO

  22. India Tur output Source: Agriculture Department

  23. Tur Price Analysis • Price influencing factors • Area & production in kharif season • Weather factors – rainfall in kharfi season • Crop situation and Import of tur from Myanmar • Price review • The bull-run started from January 2007 • Prices made all time high of Rs3400 per quintal in mid-2008

  24. Tur Price Outlook • Price outlook for 2009 (Current price: Rs3000) • Medium term: Bearish- Dec – April 2009 : Rs2500 • Long term: April – Sep: Rs3200 • Supportive factors • Kharif 2008 estimated at 2.37 million tonnes down by 23 percent than last year • Beginning of new crop arrivals • Weak demand at higher levels • Higher MSP for 2008-09 : Rs 2000

  25. Tur Prices Source : Bloomberg

  26. Chana (Chick pea) • Largest pulse crop in India • Two major varieties – Desi (85-90%) and Kabuli(10-15%) • Cultivated in rabi season – November – March • Arrivals start from December in southern states (AP, KA) and from Feb – Mar in MH, MP and RJ • India annually produces about 50-65 lakh tonnes • The output averaged at 53.2 lakh tonnes in this decade

  27. Chana contd… • Major producing states are MP (42%), MH(13%), UP(12%), AP(11%), RJ(9%) and KA(4%) • Major trading centers are Delhi, Indore, Mumbai, Jaipur, Akola and Gulbarga • Mainly used for manufacture ofBesan • India is largest producer with a share of 70 percent of world output • Other major producing countries are Turkey(8%), Pakistan(6%) and Australia (2%)

  28. Chana world scenario Source: FAO

  29. Chana production in India Source: F AO

  30. Chana Price Analysis • Price influencing factors • Domestic area & production • Weather factors – rains in late monsoon season & cold conditions in Jan-Mar • Import of chana from Australia especially in Nov-Jan • Price Review • Prices made all time high of Rs3350 in Sept 2006 compare to Rs1750 one year earlier • In 2008, prices rose to Rs2900 in Feb and fell to Rs2100 in Oct

  31. Chana Price Outlook • Price outlook for 2009 (current level 2100-2200) • Medium term: Bearish- Jan – April 2009 – Rs1900-2000 per quintal (But we need to watch the MSP for rabi season) • Long term: Bullish- May – September – Rs2600-2800 per quintal • Supportive factors • Sowing of rabi chana has started & output is likely to be normal • Demand has fallen for all pulses with economic slowdown • Prices may rise from May onwards due to low arrivals and festival demand

  32. Chana price (Delhi) Source: Bloomberg

  33. Government Role • Balancing the market through intervention • Government agencies constitute one third of total pulses imports – MMTC, PEC, Nafed and STC • It banned export of pulses in June 2006 and extended till April 2009 • Government allowed import of pulses at Zero import duty in April 2007 • FMC delisted urad and tur from futures trading in January 2007 and suspended futures trade in chana in May 2008 • Centre would launch a scheme to sell 4 lakh tonnes of pulses at subsidized rate of Rs10/kg from December • MSP for 2008-09 : Urad – Rs 2521 (40% up from 2007-08) • : Tur – Rs 2000 (21.2% up from 2007-08) • : Chana – Yet to announce

  34. Report from our Research on Pulses Note: The price targets given are for NCDEX futures

  35. Contact Details

  36. Thank You! commodity@karvy.com www.karvycomtrade.com 1800 425 1900

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