Chana yesterday settled up 2.09% at 2641 on short covering amid buying at lower levels but upside was limited due to likely rise in production of summer-sown pulses. Production of summer-sown pulses is likely to rise this year due to good rainfall. Traders hope next month demand will improve due to festivals. Since spot prices are trading below minimum support price, the government might intervene in the market. The NCDEX levied special margin of 5 percent on short positions of chana from July 27. As per market sources, steady arrivals of imported chana at Mumbai port prompted strong selling in domestic market. The spot prices of Australia Chana shrugged off by almost Rs 300 per quintal in the last week. This is mainly due to strong chana production estimates in Australia. On the demand side, fragile demand of chana by millers due to sturdy kharif pulses sowing and possibility of weak demand during the festival season of August- October period will encourage further selling in both spot and futures market. As per latest release from Ministry of Agriculture, the total sowing acreage of kharif pulses as of now is reported at 73.62 lakh hectares, up almost 86% from the last year. This is mainly due to strong sowing of Tur and Urad in Maharashtra. The total output of Chana is likely to be 8.57 million tonnes in the current year. This marks a gain of 11.29% compared to the last year's production of 7.57 million tonnes. Rabi Pulses output is likely to be 12.09 million tonnes, up 9.61% on the year. Some talk is emerging about moong crop in Karnataka getting affected. In Delhi spot market, chana dropped by -68 rupee to end at 2739.1 rupee per 100 kgs. Technically market is under short covering as market has witnessed drop in open interest by -13.31% to settled at 102850 while prices up 54 rupee, now Chana is getting support at 2564 and below same could see a test of 2487 level, And resistance is now likely to be seen at 2682, a move above could see prices testing 2723.

Trading Ideas:

Chana trading range for the day is 2486-2722.

Chana ended with gains on short covering amid buying at lower levels but upside was limited due to likely rise in production.

Production of summer-sown pulses is likely to rise this year due to good rainfall.

NCDEX accredited warehouses chana stocks gained by 2481 tonnes to 155235 tonnes.

In Delhi spot market, chana dropped by -67.6 rupee to end at 2739.05 rupee per 100 kgs.