Impact of Government Policies and Market Shortages

After Indian government imposed stock limits recently, the price of Desi gram has increased by $0,024 per kg following initially falling by $0,072 per kg. Currently, it is difficult to source goods from producing markets at these prices, indicating a potential further increase that could reach $0,90 per kg.

Disruptions in Supply and Increased Demand

In response to rising prices, the government set a stock limit of 200 tonnes for wholesale traders in late June. This led to a temporary drop in prices from $0,864 to $0,822 per kg. However, due to difficulties in procuring goods and disrupted arrivals in producing markets, prices rebounded to $0,858 per kg. In the last week of May, prices had peaked at $0,906 per kg.

Challenges in Desi Gram Supply

The arrival of Desi gram has nearly ceased in major producing markets such as Indore, Gwalior, Bhopal, and Binaganj in Madhya Pradesh. Similarly, Maharashtra has seen reduced arrivals for over a month. Currently, supplies are coming from Rajasthan's Shekhawati, Nohar, Bhadra, Sawai Madhopur, Taranagar, and Sardarshahar regions, but these are also dwindling. Traders, fearing government intervention, have started reducing stocks and selling at intervals.

The country's annual consumption of Desi gram is about 12 million metric tonnes, while trade estimates peg production at 7-7.5 million metric tonnes, significantly lower than the government's estimate of 11.5 million metric tonnes. This discrepancy highlights the supply shortages and high market prices.

With limited stock in Delhi-NCR and reduced availability, prices are unlikely to decrease further. The stock limit of 200 tonnes is challenging for traders who typically sell 100 tonnes daily. Unless this limit is raised, goods will gradually be sold, potentially driving prices above previous highs.

Government measures to allow imports from Australia at low custom duties and from Saudi Arabia have not resulted in cheaper prices due to bullish markets there. Consequently, Desi gram prices are expected to remain high in the short term due to ongoing shortages.

In summary, Desi gram prices are influenced by government stock limits, disrupted supplies, and high demand. Despite production decreases, the market is expected to remain bullish. Traders and producers should prepare for continued price fluctuations and potential shortages in the near future.