Poor crops grown in some parts of the world and expected steep acreage cuts in North America will ease supply pressure
Kabuli chickpea prices are likely on the rise in 2020-21, but Canadian growers are still going to cut back on acres in a big way, says a processer of the crop.
A global glut of the product has been weighing down the market but that will eventually change as the year unfolds, said Colin Young, manager of Mid-West Grain Ltd., a processing plant in Moose Jaw, Sask.
“I’m pretty sure the market is going to go up because really, it can’t go down,” he said.
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Poor kabuli crops in India and Mexico and the potential for vastly reduced seeded acres in the United States and Canada will finally release the supply pressure on the crop.
Navneet Singh Chhabra, a trader with Global Garbanzo, India’s largest exporter of kabuli chickpeas, recently told the Global Pulse Confederation (GPC) that India is harvesting a small crop.
He is forecasting about 275,000 tonnes of production, which is well below the typical 345,000 tonnes and about 100,000 tonnes smaller than last year’s harvest.
Indian farmers opted to plant wheat instead of kabuli chickpeas due to lacklustre prices. As well, seeding was delayed, which has reduced yields.
India grows large calibre kabulis and exports them around the world and uses the money to import cheap, small calibre kabulis from places like Russia and Argentina.
Mexico is another renowned producer of large calibre kabuli chickpeas. Chhabra is forecasting 85,000 tonnes of Mexican production, which is about half a normal crop.
“This year will be the year for big calibre chickpeas,” he told GPC.
“We will see good demand and good prices for the big calibre because the supply from India remains low and the supply from Mexico remains low.”
Young said Mexico is the “best friend” for Canadian chickpea growers because it sets the price ceiling for the commodity.
“They have the most desirable chickpeas in terms of calibre and quality and reputation,” he said.
Canada can produce a decent volume of nine millimetre chickpeas, which are at the bottom of the range of what is considered to be a large calibre chickpea. The remainder of the crop falls into the small calibre category.
Growers in the U.S. have indicated they intend to slash kabuli plantings by one-third to 306,000 acres. Chhabra said he expects a similar reduction in Canada.
Young thinks there will be a bigger drop in Canada. Kabuli chickpea prices have been stagnant the past couple of years and growers experienced harvest quality issues last year.
Maybe the biggest factor in grower decisions to cut back on acres is last year’s outbreak of ascochyta blight. There appears to be a new strain of the disease resistant to strobilurin fungicides.
CDC Orion seems to be more susceptible to the new strain than CDC Leader. However, CDC Orion tends to produce more nine mm chickpeas under both wet and dry conditions.
Young thinks many farmers in the core growing area near Moose Jaw are going to opt for crops offering less risk and better returns such as durum and lentils.
“With what lentils have done in the last few weeks, that is absolutely taking acres out of chickpeas,” he said.
Russia and Turkey are the other two countries that produce kabulis that are similar in size to those grown in the U.S. and Canada.
Chhabra expects Russia to produce about 250,000 tonnes, down from 300,000 tonnes last year. He doesn’t expect any reduction in Turkey due to strong government subsidies for the crop.
Young thinks it will take until late winter 2020 or spring 2021 for prices to perk up.
He noted that big volume buyers like Pakistan tend to purchase in waves and prefer to buy during a rising market rather than stocking up when prices are low like they are today.
“When chickpeas are 60 cents a pound you can sell the same chickpea six times. Everybody wants them,” said Young.
“Then chickpeas go to 20 cents a pound and nobody wants them.”
Buyers count on making money when the market is on the rise, buying chickpeas at $600 per tonne and hoping the market is at $650 per tonne by the time the product arrives.
“They are very averse to loading up on a dead commodity that at best represents a break-even,” he said.
Canadian growers are among the only kabuli chickpea farmers in the world with on-farm storage, so they may be content to wait out the market.
Agriculture Canada is forecasting 130,000 tonnes of carryout. Young thinks that is about right.
