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Investors reap rich rewards from urad price boom

Investors have been reaping hefty benefits from the boom in Urad prices, earning a return of around 100% on their investments in the last one week.

Sep 08, 2006, 12.03 AM IST
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MUMBAI: Investors have been reaping hefty benefits from the boom in Urad prices, earning a return of around 100% on their investments in the last one week.

Take the instance of the Urad Desi contract for October delivery on the National Commodities and Derivatives Exchange of India (NCDEX). In the last week, from August 30 to September 6, ’06, the price has moved from Rs 2,667 per quintal to Rs 3,284, marking an increase of Rs 617.

Taking the average of the margins on trading during the period as 23%, an investor would have had to pay Rs 61,341, which is 23% of Rs 2,66,700 to purchase one lot of Urad (10 tonnes). In the week, the price of 10 tonnes of urad rose by Rs 61,700. This indicates that the investor would have made 100% gains on his initial investment.

Similarly, the Urad contract for September rose by Rs 565 from Rs 2,955 per quintal to Rs 3,520 on NCDEX. Taking the average of the margins on trading as 23%, an investor would have had to pay Rs 67,965 to purchase one lot of Urad (10 tonnes). In the week, the price of 10 tonnes of urad rose by Rs 56,500, clocking returns of 85% on the initial investment.

On Thursday, trading on the futures exchange cooled off a bit ahead of the fortnight of Pitrupaksha, a period observed to pay obeisance to ancestors. This has brought prices down marginally.

According to KC Bhartiya, president of the Pulses Importers Association, “Prices of urad are expected to be firm because of some crop damage due to heavy rains in western India and Madhya Pradesh. However, physical demand for the pulse would be lower if the price continues to be bullish, shifting interest to moong dal and tur dal.”

According to sources, a motor vessel believed to be carrying around 3,800 tonnes of urad and 4,500 tonnes of tur has been declared ’GENERAL AVERAGE’ which means that the vessel will no longer be arriving at the Mumbai Port. The vessel was sailing from Myanmar to Mumbai.

Rains have delayed the urad arrivals by two to three weeks pushing prices up. In Maharashtra, up to 50% of the crop is feared to be damaged.

Fresh arrivals which have slowly started trickling in, are expected to pick up by the third week of September, analysts said, keeping prices on the higher side till then.The current stocks of urad in the mandis in Maharashtra and Karnataka are 10,000-12,000 bags of 100 kg.
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