Chana futures at a record despite NCDEX cutting trader leverage

MUMBAI: The active chana futures hit the upper circuit to close at a record high of Rs 5,543 a quintal (100 kg) on Friday despite the arrival season having got under way. Brokers and traders attributed the jump to production expected to be two-fifths below last year’s 87 lakh tonnes.

Traders were also comforted by fears of a ban in chana futures getting allayed by a regulatory clarification. Rather, the regulator directed NCDEX, which offers chana futures, to raise the margin on buyers (longs) to 45% (25% in cash) from 20% effective April 22. So despite the special cash margin kicking in on Friday, chana hit a record high.

On an aggregate basis, open interest (OI) jumped to 39,210 tonnes from 38,200 tonnes a day earlier – evidence of a long build up. What’s important is that chana futures are signalling prices to jump in the months ahead, Rs 5,635 in June and Rs 5,710 in July, which warrants timely action by the government to import more for meeting the rising demand.

Incidentally, the futures price of chana was trading at a discount to the spot price of Rs 5,589.4 polled by NCDEX, showing that arrivals were probably not up to expectations.