Analysts disagree on direction chickpea market may take

Expect more price doldrums in the kabuli chickpea market, says an analyst.

Huge 2019-20 carryout volumes in Canada and the United States will lead to continued stagnation, Chuck Penner, an analyst with LeftField Commodity Research, told delegates attending the Canadian Special Crops Association’s virtual annual convention.

Statistics Canada is estimating 240,000 tonnes of Canadian chickpea production this year.

Penner thinks that is optimistic, considering Saskatchewan Crop Insurance Corp. is reporting that insured acres dropped a lot more than Statistics Canada is estimating.

He thinks this year’s harvest could be closer to 175,000 tonnes.

However, that 65,000 tonne difference is almost immaterial given that Statistics Canada said there were 250,000 tonnes of July 31 carryout stocks.

“It might take at least another year to finally use up those burdensome stocks and particularly in North America,” said Penner.

Both of the other presenters on the chickpea panel took issue with Penner’s supply numbers.

Colin Young, manager of Midwest Grain, pegs production at 150,000 tonnes and carryout at 140,000 tonnes.

Young said most of the carryout is good quality crop from two years ago that is unlikely to be moved at today’s prices.

Ali Siddiqui, trade director with the Northern Chickpeas Alliance, isn’t buying Statistics Canada’s production estimate and he thinks carryout could be as low as 100,000 tonnes.

Young said this year’s crop is excellent quality, which is a nice turnaround from last year. However, the calibre is significantly smaller than usual.

He estimates 20 percent of the crop is nine millimetre, 60 percent is eight mm and the remainder is seven mm.

Siddiqui said that is significant. India’s nine mm pricing doesn’t work with today’s 44 percent import duty, but it is closer to working than it has been in years, and some trade could be happening soon if there is a limited supply of large calibre kabulis on the market.

Penner said last year’s Canadian export program was pathetic, with a steep drop off in sales to important markets such as Pakistan and Turkey because of stiff competition from other regions.

“Russia has been exporting at a record pace,” he said.

Penner expects a nice rebound in Canadian exports in 2020-21 to about 150,000 tonnes, up from slightly more than 100,000 tonnes.

That is because global kabuli chickpea production is falling in key markets like the United States, India and Turkey.

The U.S. Department of Agriculture is forecasting 175,000 tonnes of U.S. production, which is way down from the past couple of years.

However, there is another 175,000 tonnes of carryout from the 2019-20 crop, so it basically has two years of supply.

Pakistan is one of Canada’s largest markets. Siddiqui said demand in that market plummeted during COVID-19.

Chickpea consumption in Pakistan largely occurs in the hospitality industry, which has shut down for months.

“Only now is there signs of recovery,” he said.

Chickpea inventory piled up when people were forced to stay home. The same situation occurred in markets in the Middle East and North Africa. However, demand should slowly come back as hospitality business picks up.

Young said U.S. chickpea demand also suffered a major blow when the U.S. Food and Drug Administration issued a report linking pulse-based pet food with a disease causing enlarged hearts in animals, a report that has since been refuted in other studies.

Pulse-based pet food demand that had been growing at 25 percent per year started to decline, leaving manufacturers over-stocked on the ingredient.

However, he is convinced that will eventually work itself out and demand will resume.

Young said many farmers are holding out for prices of 30 cents per pound, and they have “excellent cash flow,” so there is no urgency to sell.

Penner noted that kabuli chickpea prices are starting to rise in India, reaching levels not seen since early 2018. That is one sign of optimism for the market.

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