Export market | Strong start could push lentil prices down, says consultant
India is poised to buck the recent trend of disappointing summer pulse crops.
Monsoon rains are 21 percent above normal for the period from June 1 to July 8, the first five weeks of what is typically a four-month monsoon season.
“It’s as good as I can remember for some period of time,” said Greg Kostal, president of Kostal Ag Consulting.
“(It) is giving guys a reason to plant earlier, more area and it creates a sense of optimism and of course that trickles down into buyer psychology.”
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Twenty of the country’s 36 states are reporting rainfall 20 percent or more above normal, including all of the key pulse growing states.
Growers had planted 4.54 million acres of kharif pulses as of July 5, up from about one million acres the same time last year.
“Typically, planting earlier is beneficial and you get more area,” said Kostal.
“It just increases the probability of greater production prospects.”
Pigeon peas are the biggest kharif pulse crop, accounting for half of last year’s production. What happens to India’s pigeon pea crop is of great interest to Canadian lentil growers because green lentils are a substitute for pigeon peas.
Kostal said the strong start to India’s kharif crop doesn’t bode well for green lentil prices. He is forecasting a price range for No. 2 green lentils between the high teens and 20 cents per pound.
“For green lentils to engage in a more robust price trend we’re going to need a quality problem here,” he said.
Statistics Canada is forecasting 820,000 acres of large green lentils, down one-third from last year’s 1.23 million acre crop. Supplies are expected to be ample despite the acreage decline due to a large carry-in from 2012-13. There doesn’t appear to be any big agronomic problem with the crop to date.
“The combination of decent rains (in India) and no alarming crop adversity threats here in Saskatchewan gives people confidence to wait and see,” said Kostal.
A good monsoon season will also boost rabi or winter pulse crop prospects because reservoirs will be replenished, so there could be less “chase it” mentality with peas, red lentils and chickpeas, he said.
A slumping Indian rupee is also putting a damper on pulse prices because it makes imported product more expensive.
Kostal remains optimistic about pulse demand because Indian farmers harvested good wheat, rice and chickpea crops in 2012-13, which means they have money to spend on food and pulses are a big part of their diet. Without that strong demand pull he would be more worried about price prospects.
Another factor that could influence pulse markets is a proposal by India’s Commission for Agricultural Costs and Prices to apply a 10 percent import duty on pulses.
Pulse imports have been duty free since 2006.
The aim of the proposed duty is to protect Indian pulse growers from cheap imported product. Pigeon peas from Myanmar are selling for 20 to 25 percent less than those produced in India.
A previous attempt by the same group to implement an import duty was shot down by other government departments in November 2012.
But according to an article in The Times of India, there may be some appetite for a duty this time. The paper quotes a senior government official who says India’s food ministry is in favour of a 7.5 percent duty.
If that happens it could change the demand picture for a variety of Canadian pulses.
“I think that consumption would pull back a little bit,” said Kostal.
“If they were to put that (duty) on, I would view it as price numbing.”
