What happens in India to determine pulse market

When it comes to Canadian pulse crops David Newman of Commodious Trading in North Saanich, B.C. said producers, speculators and processors are long and that has been of great concern to him.

“You have everybody wanting to sell and you better hope that there’s someone there to take all of it,” he said.

The wildcard in the pulse market is what transpires over the winter and spring in India, the world’s top producer and consumer of pulses.

“They sway the balance all of the time,” Newman said.

Currently, the pulse industry in India has focused on drought, political machinations in the lead up to India’s national election this spring and the turmoil between the Reserve Bank of India and the national government over monetary policy. Prior to this India was experiencing a drought and Canada was one of the countries they turned to for pulses.

“They needed good stuff and they just bought everything we had. But that was a disaster too for a lot of people with hugely overpriced commodities that couldn’t get sold anywhere else,” Newman said.

Then over the course of the past year India hiked import duties on Canadian pulses, a move largely seen as the ruling Bharatiya Janata Party trying to gain favour with farmers, a powerful voting bloc.

“The one thing that I’ve learned in my experience in this business is that when you’re talking about India, that it’s not a linear thing,” he said.

Newman said many Canadian producers still have “a reasonable amount of stuff” in their bins and he doesn’t expect a major decline in the amount of pulse acres to be seeded in 2019.

“It’s still one of the better returns,” Newman said, but he’s still concerned about the current situation in Canada.

Canada’s carryout of lentils as of July 31, 2018 was 876,000 tonnes and 315,000 tonnes the year before, according to Statistics Canada. For peas, last year’s carryout amounted to 650,000 tonnes and it was 300,000 tonnes in 2017.

“Everybody is long and when everybody is long for January-February-March, in anticipation of something, if that demand doesn’t quite materialize quite the way people are anticipating, there are a lot of people who need to sell.”

Other than India, he said South America and Europe have been good markets for pulses, but North Africa and Turkey be should be avoided, calling them “precarious places to be” and noted sellers weren’t always paid.

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