Week Ahead: Urad prices to remain under pressure due to increase in supply

MUMBAI, 13 Aug (Commoditiescontrol): Burma Urad extended fall for a second straight week due to factors such as thin mills trade, slow offtake of Urad, and weak cues from the Burmese market.

Burma origin Urad FAQ and SQ variety fell sharply in Chennai by Rs 300 -400/100kg. Whereas price remained unchanged in domestic origin Urad.Urad dal prices were also down by 300-400/100kg.



As per the latest sowing data released by the government of India 2022-23, Kharif Urad acreage was down 4.55 % (for the same period last year) as of Aug 12 at 34.19 Lakh Ha Vs 35.82 Last Year. The planting window has already closed as there will be a lag between actual planting and the time of reporting by the government. By the end of August, we would hopefully have the final acreage.

The Central Bank of Myanmar raised its official exchange rate from 1,850 kyats per dollar to 2,100 kyats on 5th August. In a directive dated the same day, central bank chairman U Than Nyein said export companies would now only be required to convert 65 percent of foreign currency earnings into kyats at the central bank rate, down from 100 percent previously. They have 30 days to use the remaining 35 percent to purchase imported goods or make other trade or non-trade cross-border payments. After 30 days, if it is not used, the remaining 35 percent of export proceeds must be converted at the official central bank rate, according to sources in the export/import community.

Due to the steep devaluation of the Burmese currency prices of Urad shot up in the local market. During the period 05th August 22 to 13 Aug prices shot up for Urad Faq from 16,70,000 Kyat /Mt to 18,60,000 Kyat/Mt a gain of around 11% whereas in dollar term it fell from $970/Mt to $875 a fall of around 10% indicating increase in supply.

As per reports crop condition in Madhya Pradesh and Uttar Pradesh is fair and higher though some crop loss in Maharashtra is expected.

In forward business, Burma Urad SQ variety is quoted at Rs 8,150/100Kg for September delivery and Rs 8,250 for October. Urad FAQ variety is offered at Rs 7,200/100Kg for September and Rs 7,225 for October.

At Guntur, Urad polish and unpolished dropped for a second straight week by Rs 350 each at Rs 8,300/100Kg and Rs 8,100, respectively. Also, branded Urad SQ Gota were offered lower at Rs 102,00.

Trend: Urad prices are likely to remain under pressure due to increase in International as well as domestic supply. Due to the devaluation of the Burmese currency price of Urad supply is likely to increase from Burma in the near term. On the other hand, the domestic supply of urad will increase with the full-fledged arrival of the new Kharif crop in September. Though some centers such as Solapur in Maharashtra have already started however moisture content is said to be high due to rains during the harvesting.

(By Commoditiescontrol Bureau; +91-22-40015513)