Reports from India indicate farmers are shifting out of pulses and into wheat for the winter crop season, but a Canadian analyst says it is premature to draw conclusions about planting in that important grain growing and importing country.
Newspapers say the latest ministry of agriculture estimates of seeding progress show a 60 percent increase in wheat plantings largely at the expense of pulses. Chickpeas are down 45 percent, lentils 70 percent and peas 57 percent.
What they fail to mention is that less than one percent of the normal wheat crop and about 10 percent of the normal pulse crop is in the ground.
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“Seeding is in its early stages so we can’t really conclude the final area from this report,” said Stan Skrypetz, pulse crop analysis with Agriculture Canada.
But Indian grain industry analysts seem to believe the initial trend will carry through to the end of the winter seeding season. The winter, or rabi, season is when 60 percent of India’s pulses are typically grown, including its chickpeas, peas and lentils, the crops most relevant for Canadian producers.
“There is a strong possibility that pulse planting in the upcoming rabi season would take a hit. Growers are likely to plant more of oilseeds and grains,” said a story that ran in the Nov. 6 issue of The Hindu Business Line.
Such comments sparked a run-up in Canadian yellow pea prices, which climbed as high as $8.30 per bushel in Alberta and $8.25 in Saskatchewan last week.
The stories say Indian farmers are being influenced by soaring wheat and oilseed prices and by the recent government move to hike the minimum support price for wheat to a record $250 US a tonne, which will further encourage a shift out of pulses.
Indian analysts expect to see similar acreage shifts in major pulse exporting regions like Canada, Australia and the United States.
“Into 2008, pulse prices have a strong upside risk and the market is turning potentially explosive for reasons both domestic and international,” said The Hindu Business Line story.
Skrypetz said it is too early to jump to those conclusions. In India’s temperate winter climate, seeding can last well into January and a lot can change in that time.
“Really, the only certainty right now is it’s relatively dry,” he said.
India and Pakistan received normal monsoon rains but since the beginning of October, rainfall has been below normal in most regions and nonexistent in some key growing areas.
If the dryness persists, Skrypetz predicts Indian farmers may increase chickpea plantings over last year’s levels because the crop does better in drought than wheat and oilseeds.
In any case, growers will likely delay seeding this year in hope that rain will arrive, meaning their true intentions might not be known for months.
Skrypetz doubts the increase in wheat support payments will factor into this year’s planting decisions. Even though the wheat support price rose 33 percent compared to a 10 percent increase in lentils and 11 percent for chickpeas, growers are little concerned about floor prices in a bullish market.
He also takes issue with the assumption that pulse acreage may decline in North America and Australia. Skrypetz is putting together a preliminary Canadian pulse crop seeding estimate for 2008.
“At first it looked like wheat, wheat and wheat. But the other crops have come up in prices so I’m not sure it’s going to be that big a difference.”
He said Canada and the U.S. could easily have as much pulse production as last year and Australia could have more if it finally gets decent growing conditions.
Following the progress of seeding in India and other key production regions is important. But what will be equally important is watching how government policy unfolds in India, which has been limiting exports and encouraging imports of pulses.
With the landed price of green and yellow peas at more than $450 per tonne, up $100 from three months ago, it remains to be seen how long India will keep subsidizing imports. Rising global grain prices and soaring ocean freight rates may eventually cause the government to cut back on such policies, said Skrypetz.
