Prairie farmers poised to see greater prices as market signals indicate significant damage to India’s pulse crop
The wettest March in 48 years has caused extensive damage to India’s pulse crops as evidenced by rising prices, says an analyst.
The average weighted rainfall for the country in March was 62.5 millimetres, which is 95 percent above normal.
There was plenty of concern by mid-March that the rain had damaged a large portion of the chickpea crop, with some in the trade estimating a 20 percent reduction in production from 2014 because of the combination of reduced acres and rain damage.
G. Chandrashekhar, associate editor of The Hindu Business Line, wrote in a recent Saskatchewan Pulse Growers’ Pulse Market Report that losses to the chickpea crop caused by the excess rain were likely to be in the five to 10 percent range.
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That matches a report issued by India’s ministry of agriculture that said nine percent of the country’s rabi pulse crop was damaged by the rainfall.
Chuck Penner, analyst with LeftField Commodity Research, thinks the early March rain caused little damage to pulses, but excess rain during the last half of the month definitely took a toll on crops in the northern third of the country.
When he wants to know what is happening to India’s crops, he looks at what their prices have been doing. Red lentil prices jumped by three cents per pound last week, which is highly unusual right in the midst of harvest.
“That tells me the tale that they’re nervous about the size of the crop and the quality of it,” said Penner.
Red lentil prices had been dropping all summer because acreage was flat and rain had been plentiful.
“That momentum has completely shifted,” he said.
India’s woes are starting to be reflected in new crop bids in Canada.
“I’m hearing about new crop red lentil bids here at 28 to 30 cents a pound where they were 26 or 27 just a week or so ago,” said Penner.
“Indian buyers are all of a sudden trying to get coverage for the first half of 2015-16.”
Indian chickpea prices climbed before the rain came and are up about 30 percent since September because of a 16 percent decline in seeded acres.
Penner said they recently took another step higher because of rain in late March That is a good sign for Canadian yellow pea prices, which are used as a substitute for chickpeas.
Indian consultancy Agriwatch forecasts 7.9 million tonnes of chickpea production, which would be well below the government target of 9.3 million tonnes and last year’s 9.5 million tonne crop.
Penner believes Canadian growers will plant a record 3.6 million acres of lentils, which is 16 percent more than last year.
That increase had him feeling rather antsy until he saw the big increase in lentil prices in India.
“I’m not as nervous now about next year’s red lentil crop,” he said.“I would still say get some of the crop priced at these prices, but you don’t need to be as aggressive as before.”
Penner said red lentil prices have been steady to slightly higher in Turkey, which is Canada’s second most important market for the crop. Turkey’s crop will come off in about a month.
“They’ve had such good rains all winter long, I’m almost to the point of wondering, are they getting too much because on pulses of course that’s what you have to worry about,” he said.
“I haven’t heard anything. That’s just pure wondering.”
Penner forecasts 4.05 million acres of peas in Canada, a seven percent increase over last year’s crop.
He advises growers to sell some new crop yellow peas if they can find bids of $7.50 per bushel, but they don’t need to go overboard because of India’s chickpea issues.
