Recent weakness in the Indian monsoon could give another boost to the pulse price outlook.
Our pulse crop specialist, Sean Pratt, reported from the Canada Special Crops Association meeting last week that analysts are bullish about pulse price prospects in 2008-09 because they expect Canadian crop yields will likely be less than originally hoped for and demand will be strong.
India is the dominant international market for Canadian pulses and the health of its domestic crops influences how much it buys from Canada.
Earlier in the season India’s agriculture ministry forecast a significant increase in its summer, or kharif, pulse crop over the previous kharif crop.
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The summer monsoon arrived on time in June. The season’s rain total so far is just two percent below normal, a combination of a wet June and dry conditions in the last couple of weeks.
K.C. Bhartia, president of the Pulses Importers Association of India, told Reuters last week that pulse seeding in several states is not progressing well, which has pushed up prices.
There was hope that the weather pattern would turn wetter again and prevent further losses.
India produced 15.19 million tonnes of pulses in 2007-08, including 6.39 million tonnes in the kharif season.
Grain and oilseed prices have continued falling on generally good growing conditions around the world and falling oil prices.
Oil is now down 16 percent from the high of $147 per barrel set July 11 and analysts are saying it could fall to $100 by the end of the year.
Statistics showing that high prices are slowing demand are already coming in from the United States, Japan, Europe and Canada.
However, demand in developing countries such as China and India continues to grow. In those two giants, the government controls or subsidizes energy costs. In China, for example, gasoline and diesel are about 40 percent less than international prices.
Oil price forecasts depend on how long the American economy will be hobbled by the housing and credit crisis and how much the world’s oil producers are able to raise production.
Export Development Canada thinks the U.S. economic downturn will spread to other economies and oil production will rise, leading to a conclusion that crude oil will fall to around $100 per barrel by the end of the year and to $84 next year.
CIBC’s senior economist, Jeff Rubin, puts more emphasis on growing oil demand.
He notes that half the world’s population pays a cheaper, subsidized price for fuel, helping demand grow even as the United States undergoes a major restructuring, including a big reduction in the number of vehicles on roads as poor people scrap their cars and take the bus. Oil production in Mexico, the North Sea and Indonesia is declining, he notes, and huge costs are helping to delay new production from areas such as the Alberta oilsands.
Rubin, who is known as an oil price bull and for correctly predicting in 2005 the oil price rally, thinks oil will average $150 per barrel in 2009 and climb to average $200 in 2010.
A July Reuters poll of 33 analysts around the world found a consensus that international benchmark U.S. crude will average $116.99 a barrel in 2008.
The average price for oil last year was $72.30 a barrel.
The poll forecasts oil to fall to an average of $115.77 in 2009. The 2010 average will be $109.90, about $6 less than in the June survey.
