Pulse firm expects strong exports to India

Despite reports of a bumper crop, AGT official says India is already looking to book new crop purchases

A major player in the pulse crop industry is casting doubt on the Indian government’s report of a bumper harvest.


Murad Al-Katib, president of AGT Food and Ingredients, said India is always exaggerating the crop size in an attempt to keep a lid on food price inflation.


“India harvests a large crop every year, but I haven’t seen one in the last 10,” he told investment analysts on a recent conference call.


According to the latest estimate by India’s agriculture department, farmers produced a record 22.14 million tonnes of pulses in 2016-17.


The total includes a record 13.41 million tonnes of the recently harvested rabi crop, which is 14 percent bigger than the five-year average.


Al-Katib said information provided by his “local market intelligence” indicates the crop is more likely an average crop, which is corroborated by recent buying interest from Indian importers.


“We are seeing import demand resuming for the second and third quarter period and a strong desire by India to book forward for new crop,” he said.


“That gives me my best signal on what the prospects are.”


Al-Katib also assured analysts that a resolution is coming to a non-tariff trade barrier that threatened to disrupt shipments to India.


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The country has a policy requiring all grain shipments to be fumigated with methyl bromide at the country of export to eradicate any stem and bulb nematodes. 


It has had an exemption in place since 2004 allowing countries like Canada to fumigate in India instead because it is too cold to fumigate at the port of export. 


The latest exemption expires March 31, and India has said it wouldn’t be renewed. However, Al-Katib said India is reconsidering because it needs pulses.


“An extension of the exemption we believe is coming,” he said.


“We view this matter as politically motivated by the Indian government in part to support their local production and to try and show the market they’re not dependent on imports.”


Al-Katib said the reality is India is dependent on imports. He expects the country to produce four to 4.5 million tonnes of pulses this year, which is about average.


Chuck Penner, analyst with LeftField Commodity Research, has no problem with India’s report of a bumper harvest that has cooled global pulse prices.


He said yields may have been average, but acreage was way up because of sky-high pulse prices at the time of seeding. Prices have since dropped to average levels because of the bountiful harvest.


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However, he agreed with Al-Katib that Indian demand is still robust as evidenced by strong new crop prices in Canada.


Red lentils bids are around 25 cents per pound, greens are in the 30 cent range while yellow and green pea bids are in the $7.50 to $8 per bushel range. 


Those prices are down from last year’s new crop bids but they are still attractive.


Despite the strong new crop prices, Penner is forecasting a 15 to 20 percent decline in Canadian lentil acres because growers are fed up with disease problems and haunted by the lingering memory of last year’s poor harvest.


He anticipated a five percent bump in total pea acres, although greens will be down because growers typically expect a $1 to $2 per bushel premium over yellow peas.


Penner thinks pulse acres will be back to normal levels in India. There has been some speculation of a weak El Nino weather pattern developing by July, which some believe could reduce monsoon rains and Indian pulse yields, but Penner isn’t in that camp.


“Even when we had a strong El Nino, it had very little impact as far as I could tell on crops in most parts of the world, so a weak one, I’m not losing any sleep over,” he said.


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