Big Indian crop could hit pea demand

The forecast for a near-record 15.11 million tonne crop does nothing to sway the government from its recent tariff policy

India’s big looming rabi, or winter crop, will further strain pea markets in 2020-21 but there should still be sales opportunities in China at the right price, says an analyst.

India is expected to harvest 11.22 million tonnes of rabi crop chickpeas in the coming weeks, according to the government’s second advance estimate of production for 2019-20.

That is a 24 percent increase over the previous five-year average.

That doesn’t bode well for pea demand in what used to be Canada’s top market for the crop, where imported yellow peas are used as a substitute for chickpeas in many dishes.

The Indian government has erected tariff, quota and non-tariff trade barriers in recent years to keep imported peas out of the country.

Rising domestic production has allowed the government to take steps to keep imports out, bolstering domestic pulse prices for farmers.

The forecast for a near-record 15.11 million tonne crop of rabi pulses in 2020 does nothing to sway the government from that path.

“There is no urgency for India to abate its protectionist bias,” said Greg Kostal, president of Kostal Ag Consulting.

“We are at the mercy of either (the) black market or Indian policy, just like we have been before, which is not the best for demand.”

The India Pulses and Grains Association is forecasting a total of one million tonnes of pulse imports in 2020-21, down from 2.5 million tonnes in the current crop year, according to a report by IGrain India.

India was Canada’s fourth largest pea customer in 2019, buying 206,969 tonnes of the crop. The government has new import restrictions in place that will reduce that amount in 2020.

There are reports that a lot of Canadian peas are being smuggled into India by neighboring countries and that appears to be backed up by statistics.

Bangladesh was the second biggest importer of Canadian peas in 2019, buying 672,551 tonnes, a 178 percent increase over the previous year.

Nepal ranked fifth with 127,804 tonnes, a 344 percent hike over 2018 levels.

Canada’s bulk pea export program has been strong in 2019-20 with 1.48 million tonnes shipped around the world through week 28 of the crop year, a 35 percent increase over the same time last year, according to Canadian Grain Commission statistics.

Kostal said it will be tougher to send peas to India directly or through back-door routes in 2020-21 if the government’s chickpea production estimate proves accurate.

But China could remain a big buyer of peas if the price is right. China was Canada’s top customer in 2019, buying 2.03 million tonnes of peas.

“They have demonstrated the ability to buy gobs and they’ve demonstrated the ability to remain passive and lay in the weeds,” he said.

He figures yellow pea prices will need to be in the low-$6 per bushel range to attract substantial interest from China.

“If our price is competitive they have the ability to take back-the-truck-up type of demand,” said Kostal.

Stat Publishing has expressed concern that Chinese demand may falter due to the coronavirus outbreak. Trade has been disrupted by antsy shipping companies, travel bans and a sagging feed grain market in China.

However, Kostal believes China will remain a big buyer if the price is right and that should keep yellow pea acres flat in Canada and around the world in 2020-21.

“We’ve had big declines in the Black Sea. I’m not so sure that they need to decline a whole lot more,” said Kostal.

He believes green pea acres may increase because stocks of that type of pea are low. That will cause a narrowing of the premium over yellow peas.

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