There are encouraging reports that India and Turkey could be increasing pulse imports for 2019-20.
Vivek Agrawal, director of JLV Agro, an Indian commodity brokerage firm, says pulse prices are up eight to 10 percent in the last 15 days in Mumbai.
“Unseasonal rain is creating havoc,” he said in an email.
“Damage of pulse crops is being observed in western and central India in the last two weeks and that’s the key reason that prices have skyrocketed.”
Pulse prices have risen to the point where they are approaching the government’s minimum support prices, prompting traders to ask the government to expand import quotas on certain pulses.
Agrawal’s observations jive with those of G. Chandrashekhar, global agribusiness and commodities market specialist.
He noted in a recent edition of SaskPulse’s Pulse Points publication that the Indian pulse market is gradually moving toward a balanced supply-demand situation.
Despite various tariffs and quotas, India still managed to import 1.1 million tonnes of pulses in the first half of 2019-20 including 400,000 tonnes of yellow peas and 350,000 tonnes of lentils.
India has placed a 50 percent duty and a 50,000 tonne quota on pea imports but many traders are circumventing the quota through favourable court orders, said Chandrashekhar.
Lentils face a 30 percent tariff but there is no quota. Analysts say Canadian lentils are price competitive in India despite the tariff.
In fact, India has imported 574,086 tonnes of Canadian lentils in the first nine months of 2019, making it the top export market by a landslide. Bangladesh is the next biggest buyer at 187,459 tonnes.
There are also reports that Canadian peas and lentils are being smuggled into India through neighbouring countries like Bangladesh.
Kharif or summer pulse production in India is estimated at 8.23 million tonnes, well below the government target of 10.1 million tonnes. Many traders feel it will be lower than that because of late-season rainfall.
“In the coming months, New Delhi may well reconsider the existing import restrictions and possibly loosen them, even if not fully eliminate them,” he said in his Pulse Point article.
Greg Kostal, president of Kostal Ag Consulting, doubts that is going to happen.
“I’d be shocked if they relinquish those controls. If it does come, I think it’s going to be metered and manageable,” he said.
Kostal said there is always rampant speculation about what India’s government is going to do. A few months ago there was talk it was going to increase tariffs.
There are also reports of production problems in Turkey, which has traditionally been Canada’s second-biggest lentil customer behind India.
Drought has drastically reduced pulse yields in that country, according to an article published on the Global Pulse Confederation (GPC) website.
“This year, because of yield issues, the red lentil crop will be around 150,000 to 170,000 tonnes,” Merve Fettahoglu, finance manager at Goze Agricultural Products, told GPC.
That is half of a normal crop.
Kostal is skeptical of that estimate.
“That seems extreme,” he said.
Turkey harvests its lentils in June and July, so he thinks the market would be buzzing about such a small crop.
The Turkish Statistical Institute is reporting 310,000 tonnes of red lentil production, which would be identical to last year.
The GPC article is reporting 400,000 tonnes of chickpea production, a 58 percent reduction from the previous year.
“We had good weather at the start but then we didn’t get the rainfall we needed,” said Fettahoglu in the GPC article.
But again there is a big discrepancy with the official estimate. The government is forecasting 650,000 tonnes of production, a slight increase from last year.
Kostal said it would be a big deal if Turkey’s lentil crop was as tiny as the GPC story suggests.
“If they have smaller crops, that will tilt the trade flow towards importing more,” he said.
That would be a good development because Canadian lentil exporters have been facing fierce competition from Kazakhstan in Turkey.