Panic grips chana futures after rumors of ban surface; centre confirms proposing stock limits

MUMBAI | NEW DELHI: Panic gripped the chana futures counter on Wednesday after rumours surfaced of a ban on the product from the futures market. However, a food ministry official told ETthat it was proposing to ask states to impose stock limits on the pulse to control inflation. “We are asking states to ensure pulses prices are stable and supplies are steady and seeing if there is a need to put stock limit,” said a ministry official.

He said the government has proposed to states to consider stock limits on sugar, with the same aim. Delhi and Rajasthan have imposed stock limits on pulses. The impact on the most active chana contract on NCDEX was immediate. From a high of Rs 5,544 a quintal (100 kg), the contract last traded at Rs 5,368, down almost half a percent as traders cut outstanding positions, or open interest (OI), from 38,910 tonnes on Monday to 29,150 tonnes on Wednesday.

The fall in OI clearly signalled the panic based on the unconfirmed rumour of a ban. However, market watchers like Kishore Narne, head of commodities at Motilal Oswal Commodities, feels stock limits could be “counterproductive” at times as they sent out signals of a shortage that could entice traders holding small quantities of stock at times of a shortage to abstain from releasing stock into market on hopes of higher prices.