Rising tur dal prices send traders' pulse racing
Don’t take your daily helping of yellow dal for granted. The price of tur dal (pigeon peas), better known as arhar, is moving up, and traders are making the most of the bull run.
By Deepa Krishnan, TNN |
MUMBAI: Don’t take your daily helping of yellow dal for granted. The price of tur dal (pigeon peas), better known as arhar, is moving up, and traders are making the most of the bull run.
Sample this: An investor who spotted the opportunity a month ago and bought a contract when the price of desi tur deliverable in March was ruling at Rs 1,800 per quintal levels would be making a profit of Rs 600 per quintal, with the current price ruling at Rs 2,400. That is to say, after purchasing one lot of 10 tonne in December, the investor would have made Rs 60,000 on every contract if he squared-off his position today.
There is opportunity for arbitrage too. The difference between the physical and the futures price a month from now is offering a return of 5% on investments on the imported varieties, and 11% on the local varieties translating to an annualised return of 33% and 52% each.
Take the current spot price of tur Rs 2,333 per quintal on the imported variety inclusive of the godown rents and deliver brokerage. If an investor had some open positions to sell on the April contract and bought one lot of 10 tonne from the spot market and sold it on the futures platform squaring off his position, he would have gained Rs 132 on his transaction, taking the highest price of Rs 2,462 made on Tuesday on NCDEX. This is about Rs 13,200 on every lot
of 10 tonne.
Similarly, in the case of the local variety, with the price at Rs 2,203 per quintal in the physical market and the futures price at Rs 2,465, an investor would have made a profit of Rs 26,200 per lot on the futures market.
ADVERTISEMENT
According to commodity trader, Kushal Thaker, “India produces about 80-85% of the world’s tur crop. This year it is roughly expected to be 26 lakh tonne, which is still short of the demand by 4-5 lakh tonne. The shortfall is imported from Myanmar and Tanzania. However, owing to good demand for urad in 2006, these countries diverted some of their interests towards that pulse. This is causing the bullishness in the commodity.”
Besides, the local crop is also expected to be damaged in Maharashtra and Karnataka, which is expected to hamper the supplies. Arrivals begin to pick up in mid-January. According to another trader from a Mumbai-based trading house, “The current arrivals in Gulbarga are about 18,000 to 20,000 bags. Full-fledged arrivals are expected to begin over the next week, which would indicate how serious the shortfall could be.”
The sowing season for this crop is in the summer. June and July are considered to be the best time to plant this crop. The seeds start germinating in two weeks time. The plant starts flowering with the upcoming of October and it is harvested in December and January.
deepa.krishnan@timesgroup.com
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
