IFT offers a global pulse outlook based on presentations and discussions at the 2014 CICILS World Pulses Convention, and on post-convention interviews.

By Dario Bard

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The 2014 CICILS World Pulses Convention held in Cape Town, South Africa, brought together nearly 600 delegates from 40 countries and created a unique setting for industry members to connect and share their perspectives on the latest happenings in the world of pulses.

Gerald Donkersgoed of Ilta Grain from British Columbia, Canada, noted that the venue was great and the event, which was very well attended, offered excellent opportunities to meet other members of the trade.

“The convention was a grand success,” said G. Chandrashekhar of The Hindu Business Line Newspaper. “In addition to the usual focus on crop-wise market and price outlook, this year’s discussions centered around the UN approved International Year of Pulses 2016.”

Less than six months prior to the convention, the United Nations officially declared 2016 the International Year of Pulses, lending this year’s premier pulse industry event an added infusion of energy and excitement. At the convention, the mood was generally upbeat, as exemplified by Chandrashekhar’s optimistic assessment for 2014.

“I expect the pulses trade to expand this year,” he summed up, “and the expansion will be driven primarily by Asia, especially the South Asian countries and China.”

Chandrashekhar, however, advised traders to closely track weather developments and to avoid taking far forward positions until the possibility of an El Niño event was better defined. He went into more detail on this and other issues in his Global Pulses Supply and Demand Outlook presentation, which kicked off the informative portion of the convention.

Chandrashekhar’s presentation and those made during the various panel discussions are summarized below.

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Photo: Chandrashekhar presenting at the 2014 CICILS Convention in Cape Town.

Global Pulses Supply and Demand Outlook

Chandrashekhar began his presentation by discussing a series of global uncertainties every commodity trader ought to be aware of, with weather being arguably the biggest. Addressing the major weather concerns of 2014, Chandrashekhar pointed out that Southeast Asia, Brazil, parts of Australia and Eastern Europe around Poland were all experiencing dry conditions.

The biggest weather issue for 2014, however, is the possibility of an El Niño event. Both of these factors—the dry conditions in several parts of the world and the chance of an El Niño year—have led to speculation in agriculture markets, causing, for example, coffee prices to increase by 60% since the start of the year. Long positions have been built in the futures markets, noted Chandrashekhar, on the expectation that weather events will decrease agriculture production.

These weather uncertainties are also being reflected in planting decisions, with lentil and pea acreage in Canada expected to expand by 20% and Australia looking to plant somewhere between 1.37 million and 1.61 million hectares of pulses this year.

Looking at overall supply, Chandrashekhar’s expectation is that production will be up in 2014-15 compared to 2013-14, with increases in dry beans (up 700,000 MT), lentils (up 300,000 MT) and desi chickpeas (up 700,000 MT).

Expanding on the topic of El Niño, Chandrashekhar said that should the phenomenon be confirmed for 2014, its biggest impact would be felt in Southeast Asia and India. In India, a slightly weaker southwest monsoon with just below normal rainfall has been forecast. According to Chandrashekhar, this in and of itself should not lead to significant reductions in India’s pulse production.

But should El Niño strike, things could change. At the moment, the chances of an El Niño event in 2014 stand at about 60%, but even if it does materialize, there is uncertainty as to exactly when during the last six months of the year it will manifest itself and with what intensity. If El Niño strikes after September, post India’s harvest, it obviously won’t matter in terms of that country’s production. It is worth noting, however, that the empirical evidence suggests that when Southeast Asia suffers the effects of El Niño, North America experiences excellent weather and produces a very good crop.

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Photo: Chandrashekhar giving his 2014-15 expectations on world pulses production.
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Source: G. Chandrashekhar’s CICILS presentation

Chandrashekhar next focused the audience’s attention on South Asia, particularly the nations of India, Pakistan, Bangladesh and Sri Lanka, with a total population of more than 1.6 billion inhabitants (23% of world population) and a combined GDP of nearly US$ 2 trillion. This region of the world harbors the largest number of the world’s poor, and therefore it is a major market for nutritious, low-cost, high protein foods such as pulses. To boot, the economies of these four countries is growing, which translates into increased food demand per capita.

For these reasons, Chandrashekhar advised pulse traders to make this their number one market, and he drove the point home by noting that, in the case of India, supply is unable to keep pace with demand despite domestic pulse production increases of at least one million tons per year as well as increased pulse imports.

Further, taking 25kg per year as the recommended dietary intake of pulses per capita according to nutritionists and medical experts, India’s current consumption is half of what it should be. Demand, therefore, could go through the roof, said Chandrashekhar, especially in countries where large segments of the population are living in poverty, such as in India.

The challenge for the pulse industry, however, is that in price-sensitive emerging economies like India, pulses must compete with even cheaper sources of protein, namely peanuts and soybeans. The question, then, is how to make pulses more affordable and accessible to the world’s poor.

In terms of prices, Chandrashekhar noted that agriculture commodity prices are currently high because the market deems the weather risk high. Additionally, a price correction is likely in the case of a good production year out of North America.

In 2014, the industry should expect to see India import larger than normal volumes of pulses starting in July, when Ramadan commences, and continuing through October, during which time India celebrates a series of festivals. In fact, India has already forward contracted at least 600,000 MT of yellow peas out of Canada, among other pulses, for September/October.


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Green Lentils

Donkersgoed led the green lentil discussion panel and began by noting a downward trend in lentil prices over the past three years, which he suspects have hit a low point and will turnaround this year. Referring to the railway logistics issues that have plagued Canada’s pulse industry this past winter, Donkersgoed said that now that Canada has become an oil exporting nation, grain shipments must compete with oil shipments for scarce railway resources to move product 2,000 miles to port.

Asked in a post-convention interview if he foresees a repeat of the transportation issues this coming winter, Donkersgoed replied, “The problem is lessening now, but it is not going to go away.”

Greg Simpson of Simpson Seeds, based in Saskatchewan, Canada, spoke next about green lentil production. Last year, thanks to improved genetics and equipment, accompanied by near perfect weather, production for all crops in Canada’s Western Prairies hit 80 million MT, 50% above normal. The volume was so large that it overtaxed a transportation system that is accustomed to moving 34 million MT of product for export. As a result, the industry has large carryovers of all grains. In terms of lentils, estimates range from 200,000 MT to 300,000 MT of carryover, but with red lentil demand up, the majority of carryover stocks are expected to consist of green lentils.

Simpson predicts lentil planting will be up this year as canola and wheat prices have come down and fertilizer prices have gone up. However, this won’t translate into a larger planted area for green lentils because red lentil prices are higher and therefore will dominate the green-red lentil mix.  Simpson estimates Canada’s green lentil planting at 767,000 acres, which (assuming normal yields) would see 2014 production drop from last year’s 575,000 MT to 481,000 MT. Additionally, the green lentil crop may see yields impacted as planting delays push the expected harvest date further and further back.

Next, Donkersgoed introduced D.R. Balan of V.N.M.A.D. Firm from South India, who addressed the demand side of the equation. Balan noted that the government is the biggest buyer of green lentils in India, and that imports will depend on institutional demand. At the moment, he said, the government is considering extending its lentil purchases for the next two years, which would mean continued high demand from India.  Asked if he sees this institutional demand from South India eventually transforming into more reliable commercial demand, Balan noted that lentil shipments are also being imported through ports beyond South India.

Next, Albert Garcia of ALONS-GAR, S.L., based in Barcelona, discussed demand from Spain. Spain produces a green lentil crop, but the country is usually a net importer. In June 2013, however, it harvested a record lentil crop estimated at 30,000 MT to 35,000 MT, most of it green lentils. As a result, Spain has not had a need import green lentils from Canada. This year, Spain planted slightly more lentils, but should today’s dry conditions persist, Canada would have an opportunity to resume exports to Spain in September/October.

Meanwhile, Algeria, Africa’s biggest green lentil importer, has plenty of stocks built up due to its tendency to import more than its population demands, reported Atef Tadros of Teekay and Danny International from Egypt. Additionally, Algeria’s neighbors have closed their borders to trade, leaving Algeria with large stocks that it is presently selling below cost.

Demand in Northern Africa is still there, but imports are complicated by political instability. Tadros advised traders to follow the situation closely and work with trusted partners.

Latin American markets, meanwhile, continue to be reliable importers of Canadian green lentils.

Asked about prices during the Q&A, a number of panelists felt green lentil prices would increase. In a post-convention interview, Donkersgoed noted that should El Niño materialize this year and impact the Indian crop, it could lead to higher import demand from India and, consequently, higher prices.

Also during the Q&A, Tim McGreevy of the U.S. Dry Pea and Lentil Council gave a quick rundown of lentil production expectations in the U.S., stating that planting is down but not as low as reported by the USDA, since delays in fertilizer shipments are seeing farmers turn to low-fertilizer alternatives such as pulses. McGreevy estimates 320,000 acres of lentils will be planted in the U.S. He also noted that the growing area is shifting west, and in this regard Montana is seeing significant increases in lentil plantings. He expects a good crop this year.


Black Matpe, Pigeon Peas and Mung Beans

Than Oo of War So Oo Co from Myanmar kicked off the discussion with a report on black matpe production in his country. In Myanmar, black matpe is a winter crop, planted during October/November and harvested in February/March. Production has averaged about 600,000 MT over the past five years, but 2014 production is estimated to have come in at 575,000 MT due to encroachment of green mung beans and delayed planting as a result of rains.

Myanmar exports 90% of its black matpe production, with 70% destined to India, 10% to 15% destined to Pakistan and the rest to Southeast Asian countries like Bangladesh and Sri Lanka, and to the Middle East as well. Carryover is estimated at 50,000 MT. Through the end of April, 60,000 MT of new crop has been exported.

Black matpe prices fluctuate widely, and have increased by US$ 150 per MT since harvest in March. In fact, prices jumped up by 13% the week prior to the convention.

Moving on to pigeon peas, Oo said that Myanmar’s production averages 300,000 MT, but is quite variable. Pigeon pea is a six month crop, with planting in June and harvest in December/January. The previous campaign’s production came in at 190,000 MT, and this most recent crop is estimated at between 170,000 and 180,000 MT. The low production estimate is due to extremely dry conditions at planting, but the quality is good. Carryover is estimated at 25,000 MT.

Through the end of April, Myanmar exported 35,000 MT of new crop.

Looking next at green mung beans, Oo reported a good crop this winter at 425,000 MT, above the five-year average of 300,000 MT, due mainly to green mung bean encroachment into black matpe growing areas. Exports are typically shipped half to China and half to India. Demand in China and a shortage in India resulting from bad weather has kept green mung bean prices firm. Carryover is estimated at 30,000 MT. Through the end of April, Myanmar exported 110,000 MT of new crop.

www.cicilsiptic.org downloads 0_75317900_14000640381_cicils_2014_myanmar_presentation2.pdf www.cicilsiptic.org downloads 0_75317900_14000640381_cicils_2014_myanmar_presentation.pdf
Source: Than Oo, CICILS presentation

Alok Bhargava of AST Ent from the UAE spoke next about Africa, focusing on the green mung bean and toor producing nations, as summarized in the table below:

COUNTRY CROP 2014 PRODUCTION ESTIMATE MAIN EXPORT DESTINATIONS
Tanzania Green mung bean (small) 50,000 – 60,000 MT India, UAE, Pakistan
Toor 110,000-120,000 MT India, UAE, Pakistan
Ethiopia Green mung bean (medium) 30,000 MT India, Far East
Toor 1,000 MT India, Far East
Mozambique Green mung bean (small) 12,000-15,000 MT India
Toor (red and white) 40,000-45,000 India
Uganda Green mung bean 5,000 MT Kenya
Toor 3,000 MT Kenya
Malawi Toor (red and white) 60,000-75,000 MT India
Kenya Green mung bean 12,000-15,000 MT India
Toor 10,000 MT India
Madagascar Yellow and green mung 5,000-8,000 MT India, Far East
Source: Based on Alok Bhargava’s presentation at CICILS.

African production is on the rise. All told, these seven nations export 239,000 MT of toor and 117,000 MT of mung beans between them.

Tanzania has no carryover of toor from the current crop. New crop is expected to enter the market in June/July. Last year, prices started at US$ 650 per MT and fell to US$ 550 per MT. In terms of mung, the season is currently underway and prices started at US$ 950, climbed as high as US$ 1,100, and currently stand at US$ 1,000.

In Ethiopia, mung from current crop is completely sold out. Prices for current year crop ranged from US$ 1,050 to US$ 1,190. The next crop will come in June.

In Mozambique, toor supplies from the current crop year are low, with new crop to come in July/August. Prices last year started at US$ 575 and dropped to US$ 510. Mung season is about to get underway, with prices in the neighborhood of US$ 1,000.

In Malawi, new crop sales of toor should start in June/July. Last year, prices ranged from US$ 510 to US$ 545.

In Kenya, the mung harvest ended in early May and prices range from US$ 1050 to US$ 1150. Last season, toor prices ranged from US$ 510 to US$ 545.

Turning to India, its overall pulse production (chickpeas, mung beans, black matpe, pigeon peas and lentils) is estimated at 19.8 million MT for 2013-14. From April 2013 to January 2014, India’s pulse imports dropped to 2.6 million MT compared to 3.3 million MT during the same period a year ago. Production estimates for 2013-14 include 3.34 million MT of toor, 1.59 million MT of black matpe and 1.28 million MT of mung beans. The export of Indian pulses has been banned since 2006, with the exception of kabuli chickpeas.

Moving to Pakistan, black matpe production there is roughly 10,000 MT and consumption stands at about 80,000 MT. The gap is filled primarily with imports from Afghanistan and Burma, with smaller amounts coming in from Thailand. With respect to green mung beans, Pakistan produces 150,000 MT, with production equaling demand. The same is true of toor, with production and demand at 9,000 MT.


Red Lentils

Moderator Quinton Stewart of Viterra Pulses Grain from Canada opened the panel discussion by noting that it is an exciting time to trade red lentils, with this year starting at last year’s price peak of US$ 800 per MT.

He then introduced Fethi Sonmez of Armada Foods to discuss the red lentil scene in Turkey. Sonmez began by pointing out that Turkey’s red lentil growing area has not been affected by drought as much of the country’s agricultural lands have been. Consequently, Turkey is looking at average production this year, with estimates placing production at 400,000 MT. That amount is enough to satisfy Turkish demand, but as a gateway to other nations in the region, Turkey imports additional volumes to later re-distribute red lentils to other markets.

“Turkey consumes what she produces and exports what she import,” Sonmez summed up.

Turkey exports between 170,000 and 190,000 MT of red lentils a year, with its top three destinations being Iraq, Sudan and Egypt. Last year, it lost an important red lentil market, Sri Lanka, to Australia. Its carryover position is practically at zero and Turkish (re-)exporters have already contracted about 110,000 MT of Canadian new crop. Additionally, 70,000 MT of red lentil shipments are expected to arrive in Turkey by July. Thus, Turkish traders have acquired all the red lentils they intend to at the present price level of about US$ 600.

Farhan Adam of Marina Commodities from Canada followed with the lentil outlook from North America, beginning with the U.S. Most lentil production in the U.S. is of the green variety. Last year, the red lentil crop came in at about 25,000 to 30,000 MT from approximately 37,000 planted acres. This year, the planted area is estimated at 40,000 acres and production is forecast at 40,000 MT.

The big player in the red lentil export market is Canada, but this year’s logistical issues have kept Canadian production from satisfying international demand. In 2013, Canada planted 1.27 million acres of red lentils and, thanks to extraordinary yields, produced between 1.2 million and 1.3 million MT, with carryover at less than 70,000 MT. Domestic consumption stands at around 120,000 to 130,000 MT. However, from August of last year to February of this year, Canada only managed to export 580,000 MT, about one sixth of which was old crop. Therefore, there are still a lot of red lentils to export; should the rail situation make up its backlog, however, stocks will clear out and carryover will be about 50,000 to 60,000 MT. At the moment, due to unsatisfied demand resulting from the inability of the railways to move Canadian red lentils to market, prices are at about US$ 780.

Brett Dodson spoke next about Australian production. Last year, Australia produced 250,000 MT of lentils and, given the logistical difficulties in Canada, traders there have seen strong exports through the end of February, with 50% of the crop exported by then. Should the pace of exports hold at 32,000 MT per month, Australia will run out of stocks by August. In recent years, Australian lentil production has begun to favor small reds, and that has helped Australia penetrate the Bangladesh market. Prices stand presently at US$ 790 to US$ 800.

Next, the discussion switched to demand, with the mic being handed to Anurag Tulshan of Esarco Exim Pvt. Ltd. from India. According to Tulshan, India’s annual red lentil consumption is approximately 850,000 to 900,000 MT. This past campaign, India had been poised to see a good harvest of all winter crops, but then bad weather came in and took a severe toll. In lentils, India harvested between 200,000 and 250,000 MT, less than half of earlier expectations. As a result, red lentil prices rose, indicating a shortage. Tulshan expects India to import 600,000 to 650,000 MT of red lentil this year before new crop is harvested in February/March 2015.

“With a strong new government at the helm and with our rupee strengthening against the U.S. dollar, imports will become cheaper, which will encourage more imports,” he remarked in a post-convention interview.

Prices, he predicted, would remain high, with India buying red lentils regularly throughout the year.

Muhammad Ahmed of Awam Group followed with a report from Pakistan. Pakistan produces no more than 10,000 MT of lentils and imports an additional 120,000 MT, mainly from Canada and Australia, to meet internal demand.  This year, Canada’s logistical problems caught Pakistani buyers off guard. The shortfall was made up with imports from Sri Lanka. Additionally, a duty tariff change in Colombo created short-term demand for split lentils, which were supplied by Dubai, thereby creating more whole lentil demand from Dubai this year.

Addressing the situation in Syria, Sonmez said production there is down due to the political turmoil, but even so the country’s production is estimated at nearly 50,000 MT.

The conversation then turned to Canadian new crop. Adam reported that planting has fallen behind due to snow and rain. The planting intention for red lentils stands at 1.8 million acres, a 50% increase over last year’s 1.2 million acres. Crop size is estimated at 1.2 million to 1.3 million MT. The carryover for next year is estimated at no more than 150,000 MT.  Adam expects the logistical backlog will continue through to 2015.

In terms of new crop from Australia, Dodson said Pulse Australia is estimating the red lentil planted area at between 160,000 and 170,000 hectares. Last year’s planted area was 168,000 hectares and, based on price, Dodson feels red lentil planting will be up this year.

Global Pulse Outlook, Part II covers the panel discussions on black/white/speckled/red/faba beans, yellow and dun peas, and desi and kabuli chickpeas.


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