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Informist, Tuesday, Dec. 24, 2024

 

By Shreya Shetty

 

MUMBAI – After scaling record highs in 2024, prices of key pulses are seen moving down in the first half of 2025 owing to good domestic output and ample imports, analysts and experts said.

 

In 2024, prices of several key pulses peaked in the spot markets after the poor southwest monsoon season of 2023. The monsoon was affected by the El Nino weather phenomenon, which led to patchy rainfall across the country, resulting in lower agricultural output. Prices of chana reached a high of INR 8,000 per 100 kg in August, while prices of tur breached the level of INR 11,000 per 100 kg several times in August and September.

 

To combat the extreme rise in prices, the government in May allowed duty-free imports of all key pulses. This year, the southwest monsoon also proved beneficial for kharif crops and, subsequently, the sowing of rabi crops, which is currently on, analysts said. As such, the supply of pulses is expected to rise in 2025, they said.

 

KHARIF IMPROVEMENT

The government has estimated the total production of kharif pulses in the crop year 2024-25 (Jul-Jun) at 6.95 million tonnes, down marginally from 6.97 million tonnes in 2023-24. However, G. Chandrashekhar, an agri-business expert, suggests that the government may have underestimated the kharif output by 800,000-1 million tonnes. "The first advance estimates of the kharif crops are not based on the crop-cutting survey, and hence are not accurate," he said.

 

With good rainfall during the southwest monsoon season, kharif crops have benefited significantly, and this will be reflected correctly in the second or the final estimate, to be released in early 2025, Chandrashekhar said. The country received 934.8 mm of rain from Jun. 1 to Sept. 30, up 8% from the normal of 868.6 mm, according to the India Meteorological Department.

 

Chandrashekhar estimates the country's tur output in 2024-25 to be 3.9-4.1 million tonnes, against the government's estimate of 3.5 million tonnes. For urad, his prediction is 1.8-1.9 million tonnes, against the official estimate of 1.2 million tonnes.

 

PROMISING RABI

Due to the good and extended southwest monsoon rainfall, there is ample moisture in the soil, which will support rabi sowing, Rahul Chauhan, director at IGrain India, said. Chana acreage is likely to rebound to its normal of 10 million hectares from the dip seen last year, though the yield will depend on the weather in January and February. However, while chana sowing may reach the normal acreage, it may not go beyond as some farmers have shifted to wheat production, especially in states such as Madhya Pradesh where both chana and wheat are major crops, Chandrashekhar said. There is good demand for wheat in the markets, and it is also being procured by government agencies.

 

As of Dec. 16, the acreage under chana, a key rabi crop, had surpassed last year's acreage of 8.4 million hectares at 8.6 million hectares, according to data from the Department of Agriculture and Farmers Welfare. 

 

Rabi masur acreage could also rise to 1.7 million tonnes, the same level as last year, Chandrashekhar said. As of Dec. 16, masur acreage was 1.6 million hectares, down 1.6% on year, according to data from the department.

 

PRICE TRENDS 2025

The prices of pulses, which have been on a downward trajectory for the past two weeks, may fall further because of better domestic production and ample imports, analysts say. However, the fall will be limited and prices may not go below the minimum support prices, they said. Additionally, the country's overall inflation rate will discourage demand for pulses, Chandrashekhar said. Higher prices lead to an erosion in people's purchasing power, and they move to cheaper products. "So, a lower demand for high-priced pulses could lead to a fall in their prices," he said.

 

"Prices are seen on a downtrend in the first quarter of 2025 (Jan-Mar) not only due to the kharif arrivals, but also because stockists and investors are showing no interest in bulk-buying," Satish Upadhyay, secretary, India Pulses and Grains Association, said. Once the stockists become active, the rise in demand could boost prices in the second quarter, Upadhyay said.

 

Prices could also rise later in the year owing to the lack of carry-over stocks of pulses in the country, Upadhyay said. "For instance, last year, we had at least 250,000-300,000 tonnes of carry-over of chana, but we don't have it this year," he said. While the government is seen stepping up its procurement activities in 2025, it will be greatly reliant on imports for building up its stocks to keep prices under control, Upadhyay said.

 

On Tuesday, the price of chana in Indore in Madhya Pradesh was INR 6,725-INR 6,750 per 100 kg. The price of tur in Kalaburagi, Karnataka, was INR 6,011-INR 8,216 per 100 kg. The price of moong in Solapur, Maharashtra, was INR 7,200-INR 8,400 per 100 kg. The price of urad in Lalitpur in Uttar Pradesh was INR 5,500-INR 7,500 per 100 kg. The price of masur in Delhi was INR 6,550 per 100 kg.

 

YELLOW PEAS

In December 2023, the Centre allowed duty-free imports of yellow peas, which earlier attracted 50% import duty. From December 2023 to October 2024, the country imported 2.5 million tonnes of yellow peas, according to data from the Ministry of Commerce and Industry.

 

On Tuesday, the government extended the duty-free imports of yellow peas till Feb. 28, according to a release from the ministry. Earlier, the permission for duty-free imports was to expire on Dec. 31.

 

The government allowed the free imports of yellow peas to control the rise in prices of pulses, analysts said. Yellow peas are used as a cheaper alternative to chana and tur. However, their imports could see a gradual fall in 2025, Chauhan said. "There are around 700,000-800,000 tonnes of yellow peas still lying at ports in the country as many sellers do not want to sell them at lower rates," he said.

 

Prices of yellow peas are the lowest among all pulses, which may discourage importers from buying more yellow peas, Chauhan said. Wholesale prices of yellow peas in the spot markets range from INR 3,000 to INR 4,000 per 100 kg.

 

Upadhyay, however, disagreed. "Yellow peas are the only thing that have been controlling pulses inflation. The government is bound to keep extending the duty-free imports of yellow peas in 2025," he said, adding that the imports will be extended beyond Feb. 28 as well, as the government is still far from achieving price stability in pulses.

 

RISING IMPORTS

In May, the government also allowed duty-free imports of tur, urad, and masur till Mar. 31. Analysts predict that the government may extend the duty-free imports of pulses beyond their current expiry date, as availability will be a concern.

 

"Not only do imports maintain a smooth supply of pulses, they also make up for the shortfall in domestic production," Chauhan said. For instance, urad production is estimated to fall 25% on year to 1.2 million tonnes in the 2024 kharif season. Moreover, in the rabi sowing that is now underway, the acreage of urad is down 17.4% on year at 319,000 hectares, as of Dec. 16.

 

However, the country will not face any issues with urad availability due to plentiful imports, especially from Myanmar, Chauhan said. In 2025, Myanmar's urad production is estimated at 650,000 tonnes, he said.

 

Additionally, India's overall pulses output will not be enough to meet the country's consumption, which increases by 5-10% every year, Chauhan said. The country is highly dependent on imports, both from the supply side and price-control side, he said. "The Centre might extend the duty-free imports of tur, urad, and masur for another year at least," Upadhyay added.

 

In Apr-Oct, imports of chana rose by 101.5% on year to 151,070.23 tonnes, while those of tur were up 85.0% on year to 814,068.65 tonnes. Imports of urad were up by 47.2% on year to 472,704.21 tonnes, but masur imports fell by 41.1% on year to 499,909.31 tonnes, according to data from the Ministry of Commerce and Industry.

FUTURES FOCUS

On Dec. 18, the Securities and Exchange Board of India extended the suspension of derivatives trade in wheat, chana, moong, paddy (non-basmati), mustard seed and its derivatives, soybean, and crude palm oil till Jan. 1. SEBI had first imposed the ban on futures of these commodities in 2021. The ban on tur and urad, imposed in 2007, has also been continuously extended since.

 

For pulses, analysts expect the ban to be extended further. Opening up pulses futures will lead to a rise in prices, and subsequently a rise in CPI inflation, which is contrary to the government's goal, Upadhyay said. The ban on wheat futures is also not expected to be lifted for the same reason, he said.

 

However, the ban on futures trading in paddy and oilseeds might be lifted as their prices have been lower than the minimum support prices in the past few months, discouraging farmers, Chauhan said.  End

 

Edited by Rajeev Pai

 

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