In-depth coverage of the chickpea and dry pea market outlooks presented at the 2016 Global Pulse Convention.

By Dario Bard

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More than 650 delegates from at least 45 countries attended the 2016 Global Pulse Convention, the international pulse industry’s premier event, held in Çeşme, Turkey this past May 19th to the 22nd.

“The conference has been structured extremely well,” remarked policy analyst and commodity commentator G. Chandrashekhar. “The sessions are all interesting. The expert speakers have delivered great value to the audience. The exhibition area is again interesting. I found a great variety of products, technologies and services on display.”

This article–the second in a two-part series–focuses mainly on the final day’s sessions, particularly on the chickpea and dry pea market outlooks. The lentil and dry bean market outlooks, as well as the other sessions held during the first two days of the convention, were covered in Part I.

Although the market outlook presentations drew the biggest crowds, this year’s Global Pulse Convention also featured several other sessions on matters of interest to the industry.

For instance, there was a panel on a subject that Tim McGreevy of the USA Dry Pea & Lentil Council introduced as “the future of our industry,” namely pulse ingredients. The session began with a presentation by Murad Al-Katib of AGT Food and Ingredients, who discussed the food industry’s use of pulse fiber, protein and starch in new product formulations. Pulse ingredients are gaining in popularity, he said, because they appeal to both food manufacturers and consumers on several levels. First, food products with pulse ingredients can be labeled as non-GMO, gluten-free and low allergen, giving them broad market appeal. Second, pulse production has a small carbon footprint and contributes to sustainable food production, thereby appealing to environmentally conscious consumers. Third, their high protein and nutritional properties dovetail nicely with the growing interest in healthy foods. For these reasons, more and more new food products are featuring pulse ingredients.

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Photo: Pulse Ingredient Product Launches

AGT Food and Ingredients has made the most of this growing trend, supplying pulse flour, starch, protein and fiber not only to the manufacturers of foods for human consumption, but also to companies in the pet food and aquaculture industries.

Following Al-Katib’s presentation, Dr. Peter Jones of the Richardson Centre for Functional Foods and Nutraceuticals spoke of the important role science plays in driving market penetration for these new food products. He highlighted recent research results and the health claims they helped generate.

The future of the pulse industry was also the subject of the GPC Young Professionals panel (click to view YouTube video). This GPC-affiliated group of pulse industry members between the ages of 18 and 35 seeks to create a community of peers and groom the future leaders of the Global Pulse Confederation. Those interested in joining are encouraged to email the GPC Young Professionals at gpcyp@gmail.com.

Grain and Feed Trade Association (GAFTA) Director General Jaine Chisholm Caunt also participated in this year’s convention. In a conversation with Andrew Jacobs of AGT Foods, she discussed GAFTA trade contracts and arbitration, and highlighted the networking and training benefits of GAFTA membership.

Last but not least, a panel on transportation featured presentations by two shipping industry experts, Timur Makzume of LAM and Emre Comert of Nakkas Shipping & Trading. “What you take for granted today—low rates, abundance of space, people sleeping on your doorstep to sell you a China to France rate for US$ 250—this could all change one day, and very quickly,” warned Makzume. His presentation focused on the consolidation taking place within the shipping industry; today, the top 20 global carriers account for 95% of the world’s container capacity, he noted. Comert then discussed the challenges that have made it difficult for the shipping industry to recover from the 2008 global financial crisis.

But the most highly anticipated sessions of the convention’s final day were the market outlook panels on kabuli chickpeas, desi chickpeas and dry peas.

Kabuli Chickpeas

Brian Clancey of STAT Publishing led the panel on kabuli chickpeas. He described this product as one of the more interesting and exciting pulses this year. He believes the strong market performance kabuli chickpeas are presently enjoying could possibly continue beyond next year.

As part of his overview of the global kabuli chickpea market, Clancey reported that world supplies are tight. He estimated world production for 2016/17 at 2.314 million MT, which is a 2 million MT increase from the previous campaign. Some in the industry might find this increase surprising, he admitted, given that production is down in Mexico and flat in Canada. But he attributes this increase to greater production out of Russia, the U.S. and other origins. Despite the greater production, however, Clancey calculated a lower carryover and estimated that the overall global kabuli chickpea supply will be tighter this year than it was last year. For 2016/17, he estimated the world supply at 2.381 million MT, down from 2.408 million in 2015/16. As a result, any demand or supply shock could have a big impact on prices, he warned.

Taking a look at world production by origin, Clancey noted that Mexican production was down considerably this year, at a mere 95,000 MT compared to last year’s 147,000 MT and the five-year average of 172,000 MT. Consequently, supplies are especially tight for large caliber kabuli chickpeas, and this is reflected in the high asking price of US$ 1,800 per MT for 11 mm product. This marks the second consecutive year Mexico has harvested a below-average crop. Normally, this would create an opening for another origin to step in and fill the void, but this opportunity is limited to India and the U.S., as they are the only other large chickpea exporters.

On medium and small caliber kabuli chickpeas, there is broader competition. This year, production out of Russia is up nearly 90% from last year, according to Clancey. Russia’s kabuli chickpea exports are mostly shipped to India and Pakistan, with lesser amounts destined for the Middle East. In the Indian and Pakistani markets, Clancey theorized that Russian kabuli chickpeas may be competing with desi chickpeas and yellow peas. Should this be the case, then a new market for kabuli chickpeas has emerged. This would help explain why prices continue to tick upwards despite the increase in world supply. Clancey expects production to continue to increase in 2017.  

Russia: Cem Bogusoglu of Alegrow SA provided further insights into the Russian market. Last year, there were significant crop losses as a result of a heatwave while the crop was in its flowering stage. This year, it looks like the crop will recover, but ultimately the weather will be the determining factor. At the time of the convention, the crop was being seeded, with planting delayed in some areas due to rain. Should the crop receive good rains during the growing season, Russia is looking at a good crop. Bogusoglu estimated production at 400,000 MT to 450,000 MT, which is below Clancey’s estimate but still represents a 60% to 70% increase over last year.

Canada: Jay Paskaruk of AGT Foods estimated Canada’s 2016 kabuli chickpea plantings at between 130,000 and 150,000 acres and production at 115,000 MT. Paskaruk explained that Canada’s kabuli production has remained stable despite the crop’s strong market performance because Canadian growers are generally wary of the challenges of growing kabuli chickpeas and meeting the industry’s quality standards. But if they continue to perform well, production out of Canada may gradually increase as more and more growers decide to give kabulis a try.

Mexico: Joel Valenzuela of JOVA provided further information on Mexican kabuli chickpea production. Kabuli chickpeas are grown in the states of Sinaloa, Sonora and Baja California. Last year, Mexico produced 120,000 MT of new crop and had 20,000 MT of carryover. This year, Valenzuela estimated Mexico’s export availability at 60,000 MT. This amount is comprised almost entirely of new crop; carryover stocks this year were negligible. Further, Mexico has already exported 10,000 MT of new crop. That leaves only 50,000 MT available until Mexico’s 2017 harvest. Additionally, Valenzuela said there is a chance that production will not recover in the near future. In Sinaloa, some growers are switching from chickpeas to white corn, he reported, due to better returns for the latter. Weather has also warded off growers. For the past three winters, rains during the months of January and February have increased the risk of crop losses for chickpeas. On pricing, Valenzuela confirmed that the industry is presently asking for US$ 1,800 per MT. Although Mexican sellers have not found buyers at that price level yet, Valenzuela sees prices increasing to US$ 1,900 in August and September. Prices are high, he explained, because supplies are tight and the quality is the best it has been in recent years. Buyers need to understand, he added, that prices will not decrease because sellers have already paid high prices to growers to produce this crop and have also absorbed high input costs.

Turkey: Tuba Memis of the Memisoglu Group addressed the Turkish kabuli market. Consumption of kabuli chickpeas in Turkey stands at 350,000 MT and is trending downward, she noted. As a result, production is trending downward as well. In addition to its domestic production, Turkey also imports kabuli chickpeas from Russia, Argentina, Canada, the U.S. and Mexico, for redistribution to Middle East markets, especially Syria and Iraq. Last year, due to poor weather, Turkey’s chickpea crop came in at 100,000 MT, well below its typical production of 450,000 MT. Therefore, it imported 170,000 MT of chickpeas from the following origins: Russia (120,000 MT); Mexico (22,000 MT); Canada (17,000 MT); India (10,000 MT); Kazakhstan and the Ukraine (lesser amounts). Of its total imports, Turkey re-exported 135,000 MT to Syria, Iraq and other Middle East markets, as well as to Europe. As for this year’s crop, growers increased kabuli plantings by 30% in response to high prices. The crop will be harvested in August and if the weather cooperates, Memis believes Turkey will harvest a chickpea crop of between 200,000 and 230,000 MT. Additionally, Turkey is expecting to surpass last campaign’s 65,000 MT in exports to Syria and Iraq, and will therefore be in the market for greater volumes of small caliber chickpeas.

U.S.: Jeff Van Pevenage of Columbia Grain reported on the U.S. market and began by emphasizing the remarkable increase in domestic chickpea consumption that the industry has witnessed over the past four to five years. Much of this increase is driven by the domestic hummus and pet food industry, he said. As a result of this growth in demand, over the span of a decade U.S. chickpea production has increased from 100,000 MT per year to 170,000 to 200,000 MT per year. Last year, however, the crop came in at only 115,000 MT on dry conditions. In closing, Van Pevenage predicted that unless there is a leap in U.S. kabuli production, domestic demand will likely absorb the entire crop within the next five to seven years.

India: Rajat Sarda of Rajat Agro Commodities reported that when this year’s harvest was about to start in India, the expectation was that the kabuli chickpea crop would be somewhere in the 425,000 to 450,000 MT range. But as the first of the crop arrived, the yields were lower than projected and the production estimate was revised to 225,000 MT. In Sarda’s opinion, this revised estimate does not take into account the likelihood that several growers are sitting on their crop and waiting to see how prices evolve; for this reason, he suspects that toward the end of the year, it will be revealed that India’s kabuli production was actually somewhere in the 300,000 to 325,000 MT range. Carryover was a mere 5,000 to 10,000 MT. Over the past three to four years, India’s annual kabuli chickpea consumption has been 180,000 to 200,000 MT. Sarda sees prices remaining firm for the next three to four months on tight supplies, but when India plants its next crop, he suspects the market will see a price correction. Looking ahead to 2017, Sarda expects plantings will be up on high prices.   

Desi Chickpeas 

The desi chickpea panel was led by global agribusiness and commodity sector specialist G. Chandrashekhar, who focused on the market conditions in his home country of India, which accounts for 90% of worldwide desi chickpea production and consumption. Chandrashekhar estimated 2016 global desi chickpea production at 9.28 million MT. He attributed the largest share of this amount, 6.73 million MT, to India, which would have had an additional 1 million MT of desi chickpea production if it had not been for losses due to March rains. Australia’s estimated production was a distant second at 1.2 million MT; Chandrashekhar, however, felt that Australia may actually harvest 10% fewer chickpeas.

Looking ahead to 2017, Chandrashekhar estimated global desi chickpea production at 9.95 million MT, with India accounting for the bulk of the increase. He estimated India’s 2017 chickpea crop at 7.65 million MT under normal weather conditions, with ideal weather possibly bumping that volume up as high as 8.5 million MT; about 10% of this production would be of the kabuli type.

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Turning to the market outlook for this coming campaign, Chandrashekhar said that, considering India’s carryover into the new crop year is nil, it is unlikely that prices will soften with the harvest. For India’s 2016/17 fiscal year (April to March), he predicted that India would import 700,00 MT of desi chickpeas, down from 1 million MT in fiscal year 2015/16. Imports have slowed, he noted, due to government intervention. As a result, supplies will be tight. Consequently, he sees the import of yellow peas, which are used as a substitute for desi chickpeas, increasing.

Worldwide consumption of desi chickpeas is on the rise, said Chandrashekhar, but he believes increased production next year could result in a slight price correction. With the likely emergence of the La Niña weather phenomenon, he believes there is good potential for significant additional desi chickpea production in India’s kharif crop, planted in June and harvested in September.

Chandrashekhar also commented on what he referred to as a possible “game changer” for the global desi chickpea market. India, he said, has been experimenting with genetically modified desi chickpea varieties. Chandrashekhar reported that the initial results have been promising, although he also stated that it is unclear when the government will authorize the commercial use of these varieties given the public’s sensitivity to genetically modified foods.

Australia: Peter Wilson of the Australia Milling Group reported on Australia’s desi chickpea crop. Last year, Australia produced 1.5 million MT of desi chickpeas on good weather conditions and increased plantings; many Australian growers switched over to chickpeas from wheat because of the latter’s poor market performance.

Australian sellers expect their chickpea inventories to run out by September.

This year, Australia has the potential to produce 1.6 million MT, said Wilson. In order to achieve that volume, however, it is essential that Australia receive significant rainfall in the month of June.

Ethiopia: Bulbula Tulle reported on Ethiopia’s desi chickpea crop. He estimated this year’s crop at 450,000 MT, considerably above the five-year average of 307,000 MT. On average, Ethiopia exports 58,000 MT of desi chickpeas a year; the remainder of its crop is consumed domestically. Ethiopia, Tulle pointed out, has a population of 100 million, making it Africa’s second most populous nation behind Nigeria. For this reason, the elevated production figure for 2016 should not worry the market, he said. Tulle also provided the following figures of interest for the Ethiopian market:

  • Five-year average price: US$ 645 FOB
  • Five-year average planted area: 240,000 hectares
  • Exports (July 2015 to March 2016): 30,000 MT (major markets include India, Pakistan and Sudan)

Dry Peas

Brian Clancey of STAT Publishing led the discussion panel on dry peas. He began by noting that yellow peas are enjoying record-high prices at above US$ 400 FOB. Green peas, on the other hand, are not performing as well, with prices just above US$ 300 FOB. However, Clancey expects green peas to reclaim their premium over yellow peas sometime next year as prices react to the dwindling green pea supplies resulting from a lack of grower interest.

In North America, field pea plantings are estimated at record levels. This increase, combined with a significant increase in France as well, has the potential to elevate world dry pea plantings by 700,000 hectares. Based on this figure, Clancey predicts 2016/17 world dry pea production at 12.689 million MT. An estimated carryover of 540,000 MT would bring the total supply for the new campaign to 13.229 million MT. Of this amount, an estimated 5.420 million MT will be traded, with most of the movement occurring in the final quarter of 2016. “Once we get into 2017,” said Clancey, “what happens with the rabi crop in India will have an impact on the pea trade.”

Taking a closer look at pulse production by country, Clancey explained that France’s production is up in response to government policies that encourage the domestic production of sources of protein. There is also a significant increase in Russia’s dry pea production, but in the absence of official statistics, it is difficult to know how much exactly.

In Canada, the world’s top exporter of dry peas, plantings are estimated at a record 1.73 million hectares and Clancey projected production at 4.29 million MT, an increase of more than 1 million MT over last year. On carryover, Clancey said several sources insist inventories are empty, but he did not see how that was possible; he estimated old crop stocks heading into the new marketing year at 360,000 MT. Canada’s limited starting stocks and tight supplies should keep prices firm through the end of the marketing year, Clancey predicted.

Summing up the key points of his presentation, Clancey said he expected increased competition among buyers next year with prices remaining firm and then decreasing just as growers are making their plantings decisions for 2017; consequently, he believes plantings may decrease next year.

Australia: Nick Poutney of GrainCorp Limited updated the audience on Australia’s dry pea crop. Last year, he said, Australia had a disappointing pea crop of 200,000 MT on dry conditions. But Poutney described the soil moisture profile this year as “terrific” and, with planting intentions up 10%, estimated production at 350,000 MT to 400,000 MT. “At the moment, we are seeing one of the best starts in about ten years,” he said.

Black Sea Region: Ozan Ozturk of Agrozan Commodities addressed dry pea production in the Black Sea region. He offered the following production estimates:

  • Baltic region: 450,000 MT
  • Russia: 1.7 million to 1.8 million MT
  • Ukraine: 600,000 MT
  • Moldovia, Bulgaria and Romania: 200,000 MT

Canada: Mike Allaire of Ilta Grain reported on Canada’s dry pea crop. On carryover, he disagreed with Clancey and said Canada’s yellow pea stocks are indeed currently empty; green pea stocks do remain, however.

Allaire also suggested Clancey’s production figure may be high because it is based on five-year average yields that include the atypically high yields of 2013. If those are factored out, Canada’s production drops by 200,000 MT. Additionally, Allaire believes Clancey’s planted area estimate is high. Adjusting for these factors, he estimated Canada’s 2016 dry pea crop at 4 million MT.

U.S. and China: Kevin Price of Agrocorp International reported on U.S. and China dry pea production.

In the U.S., old crop stocks are empty, he said. In terms of new crop, plantings are up 20%, with most of the increase in yellow peas. Additionally, he informed the audience that 150,000 to 200,000 MT of new crop has already been contracted.

China normally imports 900,000 MT of dry peas per year, with yellow peas accounting for 750,000 MT of that amount and green peas the remainder. This year, however, China has imported more green peas than normal. Price said he expects China’s demand this year to be similar to last year’s.

India: Anurag Tulshan of Esarco reported on India’s dry pea market. The past two years, all of India’s pulse crops have suffered from below-average monsoon rains, he said. As a result, pulse imports increased. This past financial year, India imported 5.79 million MT of pulses. Tulshan expects similar imports this financial year as the 2016 crop was also affected by below-average rains.

Under good weather conditions, India typically produces 600,000 to 700,00 MT of yellow peas. To meet demand, it imports an additional 2.5 million MT from several origins, including Canada, Russia and the Ukraine.

This year, however, with stocks at those origins exhausted, Tulshan sees supply constrained for the next two to three months. This coming marketing year, however, he expects to see ample supplies, with a huge influx of yellow peas into the Indian market from September onwards. As this occurs, Tulshan expects to see prices gradually decrease.

To access the presentations made at the 2016 Global Pulse Convention, login to the Global Pulse Confederation’s website.

Additionally, videos of the Convention are available on the Global Pulse Confederation’s YouTube channel.

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Dario Bard, IFT Journalist