World Status for Pulses

What the next six months for peas, lentils, and chickpeas

by Brian Clancey, STAT Publishing Ltd.

When 2018 arrives the situation facing pulse markets will be clearer than it was during harvest. How many peas and lentils are available in the northern hemisphere will be known, and markets will have a sense of how many pulses will be planted in India during the coming Rabi season.

November is the most important month for planting pulse crops in India. Of all pulses sown during the Rabi cropping season, 54 per cent are normally sown that month, while 12 per cent is normally sown in October, 26 per cent in December, and seven per cent in January. How much is planted has a direct impact on red lentils, peas, and Kabuli chickpeas.

The most important pulses grown during India’s rabi season are Desi-type chickpeas and red lentils. By contrast, the most important pulse grown during the monsoon or Kharif cropping season is pigeon pea. Last year’s record pigeon pea harvest caused prices paid to farmers to drop below the country’s minimum support price (MSP). Though this year’s MSP was increased eight per cent to $819 USD per tonne, growers slashed area 19 per cent because most were forced to sell on the open market instead of to the government.

India is expected to similarly increase MSP levels for Desi chickpeas. An eight per cent increase would hike that to $646 USD per tonne. However, farmers are facing the same problems selling to the government, with the result seeded area expected to drop to around 8.6 million (M) hectares (21.2 M
acres) this winter.

This summer’s monsoon rains were average or better in virtually all parts of India. The implication is yields should be at least average for both this season’s Rabi and Kharif harvests. That should see pigeon pea output drop from 4.6 to 3.4 M tonnes, while the coming chickpea crop could sink from 9.08 to 7.8 M tonnes.

Despite the forecast decline, India imposed a 200,000 tonne import quota on pigeon peas in August. Because they covered the full fiscal year, the quota was considered filled when it was announced, with the result no further pigeon pea imports would be allowed until April 1, 2017. Though the pigeon pea harvest is still above what would be considered average, demand for green lentils should improve as long as prices are below the country’s MSP. Since they will be milled, lower grade and old crop small or medium calibre lentils could be competitive.

If green lentil demand from India improves, that will help offset tough competition from the United States (U.S.) in Latin America and Europe. After last season’s poor quality harvest, some buyers lost confidence in Canada’s grading system because they believed it was based on fair average quality instead of official grading standards. This year’s quality is significantly better, but exporters need to work to restore the confidence of some buyers.

The U.S. harvest should decline from 575,000 to 554,000 tonnes, while Canada’s green lentil harvest could end up increasing from 761,000 to 801,000 tonnes. More importantly, available supplies of good quality green lentils will be up significantly over last year. Shortages of good quality Canadian green lentils helped lift average trading levels during the past marketing year. By contrast, competition for sales of good quality No. 2 Canada or better lentils will increase, which should result in lower average trading levels for green lentils. The net result is the spread between red and green lentils should narrow considerably in the coming months, with values for green moving toward red.

Despite an expected 700,000 tonne drop in red lentil output to 1.7 M tonnes this year, it may be hard for prices to strengthen until sometime during the 2018 calendar year. 

Export movement is not expected to be as brisk as last year during the fall shipping period. Processors and importers in some key destinations such as Turkey are believed to be holding large inventories of product bought since the start of the year.

Similarly, demand from the Indian subcontinent is expected to decline through at least January because of that country’s record 1.22 M tonne harvest this year. However, area is expected to drop this winter, which should see output drop back to 1 M tonnes or less in the coming Rabi season. In turn, demand for red lentils from the Indian subcontinent should improve after February.

Field pea markets face a similar demand outlook. Record volumes of peas are expected to be shipped to China during the 2017/18 marketing year, possibly weighted toward the fall shipping period. By contrast, demand from the Indian subcontinent is expected to be slower during the fall shipping period, improving after January because of an expected decrease in Rabi season pulse production.

While India should reduce land in all classes of chickpeas, there is a chance more Kabuli-type chickpeas will be planted during the coming Rabi season because of strong international markets. A production response is also expected in Mexico. Should these two countries boost production next year, prices for Kabuli-type chickpeas would be expected to set their season lows during the first half of 2018.

If Mexico increases output, prices in the 11 and 12 millimetre (mm) market would be expected to drop from current levels. This would have a ripple down effect on values for smaller calibre Kabuli chickpeas. An exception might be the domestic food processing industry, which has been consuming increased quantities of chickpeas and other pulses and their fractions.

Competition on domestic markets will be keen, but fears about the impact of a record 608,800 acres in the U.S. were partially offset by reduced yields because of drought in Montana and parts of North Dakota. Yields are expected to be down 18 per cent from last year, with the result production is only expected to jump from 247,000 to 371,000 tonnes. While substantial, farmers and processors in the U.S. tend to be more defensive in pricing, which should limit price declines until the situation in India and Mexico is clearer.

For all pulses, growers should see good opportunities to sell during the fall shipping period. It seems likely that the best prices will be paid during the first half of the marketing year for green lentils and chickpeas, while red lentils and peas could see values bounce during the last half of the 2017/18 marketing campaign.