India's Pulse Sector Dominates News

VANCOUVER - Aug 29/06 - SNS -- The Indian subcontinent remains the most prolific source of news in pulse markets in recent weeks as the government there works hard to be seen to be dealing with high food prices.

Inflation fears were behind the decision earlier this year to eliminate the 10% import duty on pulses until March 31 of 2007 and efforts to get government controlled companies to import pulses.

Actual purchases have fallen far short of the quantities tendered, which should moderate any negative impact government buying has on the activities of private sector traders.

Efforts to encourage increased production of pulses is also forcing the Indian government to look at the efficacy of domestic pricing. Spreads between wholesale and retail prices now range between 50% and 100%. This prompted India's Forward Markets Commission Chairman, S. Sundareshan to say "something is wrong with the distribution system which is eating away most of the proceeds" which might go to farmers.

That agency plans to study whether farmers in India are, nevertheless, benefitting from a futures markets for pulses. Conceding there is no credible spot market in the country, Sundareshan believes farmers are using futures markets to make decisions, arguing this summer's increase in kharif season plantings is evidence.

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