September Week 2: Exploring The Vibrant Urad Market Dynamics
3 months ago
Grains & Pulses
Grains & Pulses

September Week 2: Exploring The Vibrant Urad Market Dynamics

The Chennai Urad market witnessed a price dip due to reduced demand. Urad production is down 14% from last year. However, the market is anticipated to stay robust with potential for growth, especially during the upcoming festive season.

The Urad market in Chennai has recently witnessed intriguing shifts that have raised concerns, but a deeper look into regional crop trends and supply-demand dynamics suggests a landscape that is brimming with growth potential. Let’s explore more about the same.

Market Recap

Last week, Chennai SQ opened at Rs. 9,450 per quintal on 4 September 2023 and closed at Rs. 9,200 per quintal on 9 September 2023 indicating a price decline. This shift of Rs. 250 per quintal can be attributed to a slump in demand. 

On the other hand, Krishna Polished Urad held its ground, being quoted at Rs. 9,550 per quintal with a strength of Rs. 100 per quintal during last week.

Regional Crop Trends

Interestingly, the new Desi Urad, sourced from Rajasthan and Maharashtra, experienced strong demand in the higher price range. It fluctuated between Rs. 8,500 and Rs. 10,000 per quintal in different markets, rendering it an appealing choice for potential buyers.

This year, the Kharif Urad crop in Maharashtra and South India has suffered a significant decline, falling below 50%. This could potentially put pressure on Urad arrivals in Madhya Pradesh and Uttar Pradesh from the end of September 2023.

However, it’s worth noting that the pipeline remains empty, and imports from Burma continue to flow smoothly. Given this scenario, the Urad market is expected to remain stable or even strong in the next 15-20 days.

Production & Supply-Demand

Interestingly, India’s domestic demand hovers around the 26 lakh ton mark annually. In terms of production, this year saw Urad cultivation in 31.89 lakh hectares across the country, representing a decrease of 14% compared to 2022.

According to the Ministry of Agriculture, during the current Kharif season, Urad production has decreased from 17.04 lakh hectares to 13.90 lakh hectares in Madhya Pradesh and from 3.56 lakh hectares to 2.56 lakh hectares in Maharashtra compared to 2022. 

Additionally, the Urad sowing area has decreased from 96 thousand hectares to 79 thousand hectares in Gujarat, from 84 thousand hectares to 61 thousand hectares in Karnataka, from 7.10 lakh hectares to 6.62 lakh hectares in Uttar Pradesh, and from 26 thousand hectares to 21 thousand hectares in Tamil Nadu. The cultivation area in Rajasthan remains almost the same at 3.18 lakh hectares.

Market Outlook

Urad arrivals in Rajasthan and Gujarat are anticipated to gradually increase. It is believed that while there is currently limited trading and some profit-taking in Urad, the quality of Urad is expected to be better this year. This could translate into better prices for farmers who are looking to sell their produce. If the supply increases in the next two months, coupled with the approaching festive season, we can expect the demand to remain robust.

OFB’s Insight

While the Urad market experienced a slight dip, it is poised for potential growth in the coming months, making it an area of interest for those involved in the Urad trade. A notable trend is the high demand for new Desi Urad from Rajasthan and Maharashtra, which is trading at attractive prices. With anticipated increases in supply over the next two months, demand is likely to remain strong, especially during the festive season. Weather conditions in the coming months, as well as the performance of Urad crops in various regions, will be key factors to watch.

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