“After an initial knee-jerk reaction to a surplus monsoon prospect, the market has come back to fundamentals. Since the short-term fundamentals remained supportive, prices recovered on Wednesday,” said Jayant Manglik, president at Religare Securities.
Since the recent peak of 2,980 last Thursday, the benchmark Dhaanya index on the National Commodity and Derivatives Exchange (NCDEX) fell two per cent to 2,920 by Tuesday. It recovered most of the fall on Wednesday, to close trade at 2,970.
“Sowing and yield of agri commodities are expected to be higher. This would keep their prices under pressure, as a normal economic principle,” said M K Dhanuka, managing director of Dhanuka Agritech, a seed and agrochem company.
Analysts say the forecasts till date are preliminary. Much would depend on timely and even distribution of the monsoon rain.
Meanwhile, short-term fundamentals, especially for weather-sensitive commodities like pulses, oilseeds and spices, remain positive. India is import-reliant for pulses and edible oils and so the fundamentals would continue to support their prices, as reflected in chana (chickpea) and mustard seed. Chana prices traded at Rs 5,185 a quintal mid-Wednesday from Rs 4,522 in early April. Mustard seed price, at Rs 4,411 a qtl, has risen seven per cent in two weeks. NCDEX, as a result, raised trading margins by five per cent on both sides in these from Wednesday.
“Most agri-commodities on the futures exchange traded higher today (Wednesday), a day after the positive monsoon forecast by the met department. Possibly as prices were already discounted in the past three days on reports of a normal monsoon,” said Naveen Mathur, associate director at Angel Broking.
These prices are likely to remain bullish till the actual monsoon rain and sowing of the kharif crop begins, analysts said.