MCX: Fall in pulse prices is a short-term phenomenon
THE FALL in prices of pulses such as chana, tur and urad on the futures market following Maharashtra Government?s decision to impose stock limits on wheat and pulses for wholesale traders is likely to be a short-term phenomenon, say analysts.india Updated: Sep 15, 2006 15:29 IST
THE FALL in prices of pulses such as chana, tur and urad on the futures market following Maharashtra Government’s decision to impose stock limits on wheat and pulses for wholesale traders is likely to be a short-term phenomenon, say analysts.
A senior official of Multi Commodity Exchange (MCX) told Hindustan Times over the phone that if the decision to impose stock limit and other measures were based on the assumption that the recent increase in prices were artificial, then they would not be effective in the long run if the rising prices are the result of fundamental factors.
He said prices had shot up basically on fears that the kharif pulses crop, mainly gram (chana), black matpe (urad), and pigeonpea (tur), has been affected by floods in the producing States. “The spot prices are still higher, which indicates that price rise is based on fundamentals.”
However, Anaj Tilhan Vyapari Sangh secretary, Sukamal Sethi, attributes the spiralling prices to rampant speculation in the commodity markets. “The multinational companies procure huge quantity of foodgrains from the farmers creating artificial scarcity.
This drives up the prices in the futures market and the food grains are then sold to small traders at these artificially high rates resulting in price rise.” However, he too was of the opinion that imposing stock limits will not help the matters and only handicap the traders.
Analysts, however, dismiss such claims saying that futures markets just reflect the situation on the ground. Although the latest inflation figures put the headline inflation at 5 per cent as on August 26, food grain inflation went up to 9.3 per cent. This shows that the food grain prices are rising much faster than the overall price increase.
For the consumer, the impact of the rise in food grain prices is more direct and severe than the hike in crude oil prices also because food grains are not subsidised by the government.
The retail prices of Chana Dal are hovering between Rs 38-42, Tur Dal Rs 26-30, and Urad Dal Rs 50-54.To prevent hoarding Central Government had recently directed the State Governments to impose stock limits on essential commodities such as wheat and pulses.