Informist, Thursday, Sep 5, 2024

By Anjali Lavania and Shreya Shetty

MUMBAI – The outlook for urad prices in the domestic market is bullish as a decline in crop acreage along with active buying by millers and stockists ahead of the festival season is seen supporting the prices, market participants said. "Urad prices, which were on a downtrend for the last two months are now stable and sudden ups and downs are seen. This may be due to festive demand," Rahul Chauhan, director of IGrain India Pvt Ltd said.

Urad, which is mainly a 90-day kharif crop, is sown during the second fortnight of June and harvested in October. The government's third advance estimate has pegged urad production for 2023-24 (Jul-Jun) at 2.3 mln tn, down from 2.63 mln tn a year ago. This is majorly due to erratic monsoon during the 2023-24 kharif season and unseasonal rainfall. "Urad sowing has reached 2.96 mln ha as of Aug 30, reflecting a 6% on-year decline," said Indrajit Paul, head of research at Agrocorp International.

REGIONAL SOWING

Madhya Pradesh, which contributes around 45% of the total urad growing area, has seen a substantial 30% on-year reduction in sowing to 979,000 ha, as of Aug 30, from 1.39 mln ha during the same period last year, according to data shared by Paul. "This decline is largely attributed to farmers' reluctance to plant urad, driven by unfavourable returns and repeated crop damage or quality loss due to unseasonal rains during previous harvests," Paul said. In the last two years, kharif urad crop has been severely affected by unseasonal rainfall, resulting in crop damage, reduced yields, and a loss of quality, Paul added.

Rajasthan, another significant urad producing state, reported a 6% on-year decrease in sowing to 298,000 ha as of Aug 30, from 319,000 during the corresponding period a year ago. However, Maharashtra and Uttar Pradesh have shown positive trends, with sowing increasing by 53% and 7% on-year to 386,000 tn and 692,000 tn, respectively, as per the data shared by Paul.

WEATHER, CROP OUTLOOK

The India Meteorological Department has forecast above-normal rainfall across India, exceeding 109% of the long period average, for September. This forecast poses a potential threat to urad crop in major growing states like Madhya Pradesh, Maharashtra, Rajasthan, Gujarat, and parts of Uttar Pradesh, particularly if heavy rains result in waterlogging in low-lying areas, analysts said.

"Kharif crops with a 75-90 day maturity period which are planted around the last week of June, get ready for harvesting in September. These crops are at increased risk of damage if heavy rains continue during this critical period," Paul said. The kharif urad harvest is expected to commence in October across key states like Madhya Pradesh, Rajasthan, and Uttar Pradesh. "Urad sowing has declined as per government sowing data. The weather was almost in favour of crops but from last week, rain in many areas has been becoming a concern now," Chauhan said.

IMPORT DYNAMICS

Urad imports in the financial year 2023-24 (Apr-Mar) were 624,222 tn, up from 524,813 tn the previous year, according to the data provided by Chauhan. "Urad production in Myanmar increased last year, which has bridged the gap between supply and demand. Next year also, a good urad crop is expected from Myanmar as the rain is good there," Chauhan said. Urad imports from Myanmar in 2023-24 were 607,489.69 tn against 512,926 tn in 2022-23.

"This increase in imports was driven by tight domestic supply and higher on-year domestic prices," Paul said. Urad imports from Myanmar during Jan-Aug are seen at 628,018.58 tn, as per data shared by Chauhan. Urad year-ending stocks in 2023-24 were at 420,000 tn vs 560,000 tn in 2022-23.

PRICE TREND AND OUTLOOK

Urad prices in Chennai registered an increase of 250–300 rupees per 100 kg last week due to weakening of selling by importers and increased buying pressure, Chauhan said. Currently, urad prices in Chennai (fair average quality) are at 8,400 rupees per 100 kg, up 2% on year. Similarly, Chennai urad prices (standard quality) are at 9,150 rupees per 100 kg, up 1% on year. The heavy rainfall has led to crop loss in Andhra Pradesh, Telangana and Gujarat. This will weigh on commodity prices in the long run, Paul said.

"Prices of urad are stable for now, but they will increase as crops have been damaged due to heavy rainfall in Maharashtra," Prem Kogta, a mill owner from Jalgaon, Maharashtra, said. Further fluctuations in prices depend on the intensity and longevity of the rain in September, he said. Urad is sensitive to rain, because of which it gets damaged easily, he said.

"Looking ahead to the medium term, urad prices are anticipated to rally due to potential harvesting delays and concerns over crop damage from above normal rainfall in key producing areas. Additionally, millers' demand-driven purchases for the festival season could further contribute to this price rally," Paul said. End

Edited by Aditya Sakorkar

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