Pulse markets are returning to normalized demand after a prolonged period of hand-to-mouth buying, which should result in less price volatility, say two major players in the industry.
Alliance Grain Traders Inc. experienced strong sales in this year’s second and third quarters, helping mop up an excess supply of poor quality lentils that had been weighing down markets since 2010.
“With the robust shipping that happened, we’re back into a more balanced position on supply and demand,” said company president Murad Al-Katib.
Sales programs to India and Turkey were unexpectedly strong during the second and third quarters, which is when the two countries usually rely on their own domestic production.
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He forecasts strong export volumes to key pulse consumption markets for the remainder of this year and the first quarter of 2014.
“The upcoming shipping periods may be some of the busiest we’ve seen in our company,” said Al-Katib.
He believes a good export program should reduce the price volatility that has plagued lentil markets lately. There will be windows where prices move up or down by one to three cents per pound, but the days of 10 cent fluctuations are in the past.
Joel Horn, president of Legumex Walker Inc., another major global pulse processor, agreed with Al-Katib’s assessment of market conditions.
“Clearly the demand has been good, the pricing has been good. Things have returned to a more normal situation,” he said.
The company’s third quarter sales were up dramatically over the previous quarter in what is usually a slow sales period.
“We’re definitely having our best shipping that we’ve ever had. I mean, this third quarter was tremendous,” said Horn.
Legumex’s primary markets are North America, South America and Europe.
“Those markets are strong right now,” he said.
“I think the whole credit situations are starting to normalize again, especially in our North American market things are really strong.”
However, one looming problem could put a damper on pulse markets. Seeding of India’s rabi (winter) crop is underway, and growers are expected to expand pulse acreage because of improved moisture conditions.
It could result in larger Indian chickpea, pea and lentil crops and reduced export volumes and prices later in the 2013-14 crop year, said Anthony Kulbacki, chief operating officer of Legumex’s special crops division.
“Likely it’s going to have a moderating influence on prices or push prices down slightly,” he said.
Kulbacki said it shouldn’t affect Legumex’s bottom line because the company doesn’t do much business into India.
“But I think from a grower standpoint, they should likely expect lower prices and I think that’s already starting to be reflected in bids in the country,” he said.
Al-Katib said there are reports that India’s kharif (summer) crop has been damaged because of excess rain, so he anticipates continued strong demand from the country in the traditional October through February shipping period. The rabi crop is harvested in March and April.
Sales to India slowed in August and September because of the slumping Indian rupee, which fell to 69 rupees to one U.S. dollar from 56 rupees over a 14-day period.
“It was a massive, massive devaluation,” said Al-Katib.
The landed local price of a shipment of Canadian lentils suddenly skyrocketed to 48,000 rupees per tonne from 39,200 rupees per tonne.
But the currency has recently bounced back to about 62 rupees per U.S. dollar, which is restoring importer confidence.
“We’ve come halfway back from where it was,” said Al-Katib.
“We’ve seen the resumption in demand in India.”
There has also been a good sales program to the Middle East and North Africa, partly because of soaring demand from food aid programs.
