India has put the brakes on pulse imports, which may be a welcome reprieve from what has been a frenetic pace of demand, says a Canadian analyst.
“We have exported so many peas we need an overall relaxation in demand from what we’ve been experiencing,” said Brian Clancey, editor of theStat Publishingnewsletter.
A year-end story published in the Business Standard,India’s leading business newspaper, said importers have stopped buying foreign product because domestic prices are about $100 US per tonne lower than global pulse prices.
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Clancey said there is no need for Canadian farmers to panic despite the prospect of losing the biggest buyer of yellow peas.
The record pace of exports during the first five months of 2010-11 will be their salvation. He estimates 1.5 million tonnes of peas were shipped out of Canada by Dec. 31.
“That’s monstrously huge,” said Clancey.
“(Demand) has to ease up. It cannot continue at this pace because there aren’t enough peas.”
Agriculture Canada is forecasting 2.4 million tonnes of exports in 2010- 11, which means 900,000 tonnes remain to be shipped over the next seven months.
Clancey is forecasting 2.6 million tonnes of annual exports because he thinks the carryout at the beginning of the year was bigger than Agriculture Canada’s estimate due to lower than reported domestic consumption in 2009-10.
“That’s maybe one of the reasons the prices are as tame as they are given the pace of movement,” he said.
Either way, he doesn’t anticipate problems moving what remains. If pea prices drop because of slumping Indian demand, the Chinese could re-enter the market and buy 200,000 to 500,000 tonnes of product.
But he doesn’t expect prices to fall much below current spot bids of about $6.50 per bushel because of the looming battle for acres. Peas can’t afford to lose ground to competing crops because they are already one of the poorer performers.
One thing that bodes well for the future of peas is that India’s agriculture minister recently said the government would extend its ban on pulse exports and the zero tariff policy on pulse imports for another year. The two measures designed to combat food price inflation were set to expire March 31, 2011.
“They like the fact that (pulse) prices are down from what they were a year ago and they don’t want to do anything to change that trend,” said Clancey.
There was doubt that the two policies would be extended because of forecasts of a bin-busting 2010-11 Indian pulse harvest.
Clancey said optimistic forecasts calling for 18 to 19 million tonnes of summer and winter season production have been steadily curtailed in the last couple of months.
India’s agriculture minister recently issued an estimate of 16.5 million tonnes, which would still be well above the usual output of 14.5 million tonnes.
Clancey said the extension of India’s export and import policy measures is a strong indication that the government believes this season’s surprising production gains won’t be sustained into the coming season and beyond.
