India may resume buying pulses

An analyst believes there could be 300,000 to 600,000 tonnes of red lentil demand out of India this crop year

India will be back in the market for Canadian pulses in the new year, according to an exporter and a commodity broker.

Farhan Adam, chief executive officer of Marina Commodities Inc., a pulse exporter in Mississauga, Ont., said western Canadian farmers “should be prepared for a good ride” by February.

The main reason for his optimism is that supply pipelines are dwindling in India and other surrounding countries such as Pakistan, Sri Lanka and Bangladesh.

“Nobody has bought anything in the right quantities. Everybody has bought poorly,” he said.

The other reason for his optimism is that India’s monsoon rainfall was disappointing, especially in some key pigeon pea growing states.

Pigeon pea prices have almost doubled in the last couple of weeks in India, which bodes well for imports of both green and red lentils.

“They will need to buy quite a bit out of Canada,” said Adam.

He believes there could be 300,000 to 600,000 tonnes of red lentil demand out of India in 2018-19. Markets like India, Sri Lanka and Pakistan prefer Canada’s crimson lentils over Australia’s extra-small nippers.

Vivek Agrawal, director of JLV Agro, an Indian commodity brokerage firm, said the major lentil growing regions in the states of Uttar Pradesh and Madhya Pradesh are experiencing drought conditions.

Farmers are focusing on planting chickpeas and yellow peas and avoiding red lentils in Uttar Pradesh because of poor returns for the crop.

Rabi pulse planting in general is down across the country. Growers had seeded 17.3 million acres as of Nov. 16, 18 percent below the same time last year.

There is also talk of an El Nino forming, which would be bad for rabi crop production because it tends to bring dry weather to India.

Red lentil prices are starting to climb in India, and Agrawal expects to see demand for Canadian lentils coming from eastern India in the coming months, he said in an email.

He estimates there are 90,000 tonnes of red lentil stocks in Indian ports and another 200,000 tonnes in government hands. The government has started selling its supplies in regular intervals, and once those supplies run out red lentil prices will further appreciate.

In the first half of November India imported 2,000 containers of red lentils at prices of US$385 to $425 per tonne.

If that level of demand continues, Agrawal expects red lentil prices to firm in Canada.

Adam said his forecast for renewed import demand from India isn’t some pie-in-the-sky idea.

“I am basing my comments on what I’m selling. I’m not throwing darts in the air. I’m selling yellow peas and I’m selling red lentils every day to India and good volumes,” he said.

He is selling to the “big shots” in India who are trying to get ahead of the game and begin stockpiling pulses at today’s prices rather than waiting for them to rise.

India has a quota on yellow pea imports, but the government is granting special import licenses to some buyers, which is allowing for some movement of the product.

Adam believes India could drop its pea quota altogether in the new year if its desi chickpea crop disappoints. He thinks it could end up being 10 to 20 percent, or about 1.5 million tonnes, smaller than the previous year. Traders will have a better idea how things are shaping up by December.

In the meantime, Australian farmers are harvesting a chickpea crop that is estimated at about 300,000 tonnes, or nearly one-quarter the size of the previous year.

If India resumes purchasing yellow peas, Canada will be facing reduced competition from the Black Sea region because its supply pipeline is “getting drier,” said Adam.

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