India is forecasting the second biggest kharif (summer) pulse harvest on record, but a Canadian analyst believes it will be smaller than the government thinks.
In its first advance estimate for the 2017-18 kharif crop, the Indian government predicted 8.71 million tonnes of pulse production.
That would be down from last year’s record 9.42 million tonne harvest, but 49 percent higher than the average output for the five years before last year.
The news is troublesome, considering India is already sitting on a stockpile of pulses that has reduced early post-harvest exports from Canada.
The summer pigeon pea crop is expected to be 3.99 million tonnes, again down from last year but 40 percent higher than the previous five-year average. Canadian green lentils are used as a substitute for pigeon peas in years when India’s crop is inadequate.
Chuck Penner, analyst with LeftField Commodity Research, said India’s first crack at estimating production should be taken with a grain of salt.
“They don’t make any attempt to establish yields,” he said.
The government multiplies its pulse acreage estimate by longer- term average yields to come up with the production estimate.
On the surface that would appear to be a reasonable approach given that this year’s monsoon rains were just five percent below normal for the country as a whole.
However, about one-quarter of kharif pulses are grown in Madhya Pradesh and Uttar Pradesh, two states where rainfall has been 15 to 30 percent below normal.
“That’s why I’m kind of thinking we’ll see below average yields,” said Penner.
However, it would still be an above-average crop because of the acreage increase.
Indian farmers planted more pigeon peas than normal despite lacklustre prices because they have limited options and the market price was above the minimum support price, he said.
As a result, the incremental de-mand for Canadian green lentils that sometimes occurs in India likely won’t be there this year.
Green lentil exporters have a solid base of demand in many other markets such as Western Europe, South America, Africa and the Middle East, said Penner. It’s not like red lentils, where India and Turkey account for a huge portion of annual demand.
Canadian green lentil prices saw a bump at harvest as customers refilled their supplies, but they have fallen since then and there could be further downward pressure if farmers decide to push sales, said Penner.
Stat Publishing reports that the Indian government is starting to sell off its 1.8 million tonne stockpile of pulses. It will begin by selling 550,000 tonnes to state governments and the private sector.
“Their release effectively increases the domestic supply, and the prospect the balance will be sold could make some buyers more patient, especially with respect to importing pulses,” Stat publisher Brian Clancey said in a recent article.
The government stocks are adding to an already over-supplied market.
“With opening season export movement from growers starting to slow, the impact of slack demand from India is starting to be felt in origin markets,” said Clancey.
India’s big kharif crop is not going to help matters.
However, the real market mover will be India’s rabi (winter) crop, which is just starting to be planted. That is when India grows its chickpeas and lentils, which can affect Canadian yellow pea and red lentil exports.
Red lentil prices have been softening in India, just like they have in Canada.
“It’s not going to encourage a whole lot of acres,” said Penner.
He expects a reduction in acres from last year to around average levels, just like he does with desi chickpeas. Kabuli chickpea plantings should rise, which could put downward pressure on prices. However, there are still decent new crop bids in Canada and the United States for the 2018 crop.
“So there are still people out there who aren’t worried about India over-producing,” said Penner.