The chickpea market is caught in a state of flux, with a confluence of factors impacting both supply and demand. The lag in the growth of desi gram stocks, juxtaposed against consumption needs, sets the stage for a detailed analysis of the current agricultural scenario.
Supply Shortfalls and Sowing Struggle
Recent reports indicate a significant shortfall in the availability of desi gram from producers and distributors, not aligning with market consumption rates. This comes at a critical time when the next harvest is still five months out, and adverse weather conditions have led to reduced sowing in key production areas. Karnataka and Andhra Pradesh have experienced lower rainfall, while Rajasthan faces a water deficit, all contributing to potential yield reductions. As a result of these factors, the government has released desi gram from its buffer stock to mitigate supply constraints, concurrently reducing the stock limit from 200 to 50 metric tons. Although this decision helped curb inflation initially, it has since led to a widespread shortage, compelling a market price decrease of USD 0,03 per kg.
Buffer Stock Discrepancies and Seasonal Demand Surges
The market is now facing a paradox where government records on buffer stocks are not reflecting the reality, suggesting the possibility of periodic bullish trends. In addition to the supply concerns, the arrival of desi gram from major mandis in Rajasthan, Madhya Pradesh, and Maharashtra has diminished by 21-22 percent on a fortnightly basis. Despite these challenges, consumer demand is anticipated to surge post-Ekadashi, driven by wedding season festivities. Desi gram continues to be an economical option for consumers compared to other legumes, which may signal a revival in market activity. Furthermore, the overall production of desi gram is projected to fall by 30-31 percent across all producing states due to a shift in farming practices favouring other crops over the past three years.
Harvest Forecasts and Profitability Potentials
This significant downturn in desi gram production, particularly in Rajasthan, has caused a drop from 11 million metric tonnes to a mere 7 million metric tonnes. Government procurement at the minimum support price of USD 6,42 per kg has not only reduced the inflow of gram to markets but also elevated the effective selling price to USD 7,2 after including interest. Despite the limited availability and high prices, the trading of Rajasthani gram is showing signs of becoming a lucrative endeavour at the current prices, as the market adapts to the evolving supply and demand dynamics. The agricultural sector thus continues to navigate through the intricate interplay of policy interventions, climatic factors, and market forces.
The current market dynamics create a scenario where it is a ‘wait and trade’ situation, as stakeholders anticipate shifts in supply and demand to determine their next move.
