Factors like extreme weather and ample stocks from last year have contributed to instability in the Indian kabuli chickpea market.

By wpengine

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When IFT reported on the extreme weather affecting India’s kabuli chickpea crop back in March, traders in the region were already setting their sights on Mexico. Indian buyers, as well as those in countries with high kabuli demand like Turkey and Algeria, were purchasing Mexican product for above average prices (US$ 1220-1240 per MT FOB). Traders assumed it was the start of a bullish run much like what they witnessed with white beans last year.

Since then prices for Indian kabuli have sunk to around US$ 940 per MT FOB, according to Sanndip Goyal of Ganesh Agro Foods, who says nearly every chickpea trader and exporter is sitting on a huge pile of stock.

“Last year kabuli chickpea exports from India were extraordinary high. Because prices were so attractive, buyers in Algeria, Turkey and the Middle East had stocked the goods over their capacity,” Goyal says.

“Having these stocks never allowed buyers to take a fresh position. In fact it gave them the opportunity to minimize their losses, and all of them became focused on clearing their stocks.”

The quality of Indian kabuli chickpeas was severely affected by heavy rains and hailstorms that lasted some 25 days in March. A high percentage of black spot was observed, prompting buyers to hold out for fresh product.

Goyal says a stronger rupee compared to last year has also acted as a psychological barrier for many traders. Crop flow in production centers has remained constant, but this has only added to price instability. Pakistan continues to purchase small caliber chickpeas from India, but the demand for large chickpeas has been sluggish. Elections in countries like Algeria, Jordan and Iraq have also played a role in halting new business. Meanwhile, Mexican chickpeas still command a premium of US$ 200 per MT over Indian kabuli.

“It appears that until the end of June farmers will finish off the majority of chickpeas in their warehouses,  so most of the left over chickpeas will be in the hands of Indian stockists,” Goyal says.

“Only when stocks in buying countries are sold off will they come to market . There’s still a lot of demand waiting for Indian kabuli chickpea exporters, and everyone is hopeful that we’ll see more activity in the trade after June, which would offer some relief.”