India expected to return to pulse market soon

Analyst says the country will soon need to buy more pulses because its farmers planted a smaller crop this year

Pulse analyst Marlene Boersch predicts Canadian exports to India will pick up later this year.

She told a regional pulse workshop in Regina that India is fundamentally food insecure and is coming off a wet season that was short of moisture.

Evidence for her optimism includes smaller planted pulse acres and low stocks. By law, India is required to maintain a one-million-tonne buffer stock, she said.

“I think in the end, when all is said and done, they will actually need to buy some more peas and some more lentils,” she said.

India should require about 1.5 million tonnes of peas and 500,000 tonnes of lentils.

The country’s officials are unlikely to make any major policy decisions before the federal elections there in spring because they don’t want to risk losing farm votes. However, the political pressure that led to tariffs against Canadian experts could ease after that.

China has picked up the slack, buying about two million tonnes of Canadian peas in 2018 thanks to fall feed pea purchases.

Boersch said political issues could also affect that market, given Canada’s involvement in detaining a Huawei executive at the request of the United States.

“If they retaliate and it’s a lasting relation that lasts more than a month or two, it could hurt us on the agriculture side,” she said.

China purchases about 97 percent of Canadian soybeans, 46 percent of canola, 57 percent of flax, 65 percent of barley and nine percent of wheat.

To a point, China is dependent on Canadian peas because Eastern Europe is sold out for the short term, but other countries can supply the other crops.

“We do not live in splendid isolation,” Boersch said. “Watch what’s going on.”

The world’s top two pea producers, Canada and Russia, have seen production declines totalling about 16 percent and small ending stocks.

She estimated there are about one million tonnes left in Russia and 600,000 tonnes in Canada.

The situation should be good for prices.

Lentil production declines in Australia and Canada were tempered by India’s growth.

Boersch said there are large idle stocks that have to be used up before prices change much.

In Canada this coming growing season, Boersch expects pea acreage to be up eight to 10 percent. Agriculture Canada is forecasting no change or a slight decrease.

Export demand will be about three million tonnes and carryout will be down to about 280,000 tonnes, she said, so if India comes calling, supply could be tight.

She said she believes India is already buying some peas.

“There were four vessels loading in January that are labelled Bangladesh,” she said. “That’s a little too much for Bangladesh at one time, actually. I think some of them are meant to end up in India.”

But the political risk remains.

“Partly because of that risk, I think you should sell most of your peas at current prices, that’s my personal opinion, and be done with, and then start looking at new crop,” she said. “Even with new crop at $7, $7.25 you might want to sell that first tranche if that covers your cost of production.”

Prices aren’t as high as they were two years ago and growers should be careful to cover their costs, she said.

For lentils, she said Canada has lost exports to Turkey, as well as India.

“When I looked at the players I discovered Canadian lentil exports to Turkey in 2015 were about 420,000 tonnes. In 2018 they were 200,000 tonnes and year to date they have taken a piddley 32,000 tonnes,” she said.

Compare those numbers with Kazakhstan and the opposite occurred. Kazakhstan sent 27,000 tonnes to Turkey in 2015 and was up to 200,000 tonnes last year.

Still, year-to-date exports are 15 percent ahead of last year and Boersch said reducing the carryout is key.

She expects similar lentil acreage this year as 2018, or perhaps a slight decrease. Agriculture Canada is forecasting a 12-percent drop.

Boersch also said Kazakhstan is likely to reduce pulse acres this year, which should help Canadian exports.

“If I’m sticking my neck out, I would sell lentils certainly if I see 20 or 20.5 cents, which we’ve seen in some areas, you should sell those red lentils, I think,” she said.

Prices near 24 cents for large greens and 20 cents for small greens are also worth considering because of the carryout.

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