The firmness in the prices is because most crops of tur (whole) that were stored in warehouses were destroyed by the high level of moisture due to rains.

The dal mills usually buy tur (whole) to process it to dal. In the current situation, mill owners don't want to risk buying moist crop as its not only difficult but almost impossible to process it.

The mills have instead resorted to imported tur (whole), which is mostly last year's crop, mainly due to the absence of moisturecontent (dry) and hence can be easily processed. Tur dal is also traded in the commodity markets and is usually quoted at 50 per cent higher than the Tur (whole) price.

Out of which 35 per cent of the cost is attributed to processing the pulse into dal.

Market dealers usually quote two prices for tur, one for the old crop and the other for the new. The old crop is usually quoted at lower rates because of its longer period of storage and less availability, while the new crop is usually quoted at high prices because of its ready availability and quality. But this year the price differences have widened sharply and the old crop, due to the demand and absence of moisture content, has appreciated sharply vis-a-vis the new crop that has a high moisture content because of the prolonged rains this year.

Market sources have also attributed the sudden rise in prices to expectations of shortfall in crops for the year 1998. This was mainly due to late rains in the last months of 1997 which had an adverse affect onthe Gujarat crops to a major extent. Most crops in Gujarat were washed away due to the rain and the crop that was finally harvested was below the market expectation, quality-wise.

Apart from India, Burma and African countries like Tanzania and Kenya are major producers of this commodities. India imports huge quantity of tur (whole) from Burma and Africa. But this year the Burmese crop also suffered which put more pressure on the supply of this commodity thus driving up the prices further.

Also, there has been non-delivery and cancellation of a lot of shipping contracts due to price fluctuations. This amounted to a sudden shortage in the commodity quantity which put an additional pressure on the supply of the crop.

The local prices which is mainly dependent on the crop availability and imported quantity were affected by the fluctuations.

During March-May period the rupee depreciation against the dollar also had an adverse effect on prices since importers were covering their open positions.

Currently,the prices have stabilised at Rs 2,100 levels. This is due to a huge quantity of import of Kenyan origin tur (whole) which is of the new crop. Tur (whole) produced in African countries like Kenya and Tanzania are of a better quality when compared with India and Burma.

(The author is a Mumbai-based commodity trader)