In-depth coverage of this year’s premier pulse industry event; part II focuses on lentils and chickpeas.

By Dario Bard

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In the second part of IFT’s two-part series on the Pulses 2017 convention, we recap the market outlook sessions for red and green lentils, as well as for both kabuli and desi chickpeas. (See Part I for IFT’s coverage of the panels on dry peas and the various classes of dry beans).

In addition to the market outlook panels, the convention also featured several other presentations. Most of these took place on the first day of the convention and were covered in Part I. The convention’s second day was almost exclusively dedicated to market outlook sessions, with a brief interlude dedicated to honoring the Premier of Saskatchewan Brad Wall, who received the very first GPC President’s Award for the role his administration played in helping the province double its pulse production. In accepting this recognition, Premier Wall gave the credit for this accomplishment to Saskatchewan’s farmers and to others in the ag sector. In this respect, he singled out Murad Al-Katib of Regina-based AGT Food and Ingredients, who in June was named the EY World Entrepreneur of the Year for 2017.

On its third and final day, the convention opened with a session on the Global Pulse Confederation’s Young Professionals, a group for pulse industry members under the age of 35 to network and become involved in the GPC’s work. The panelists for this session were Tala Mobayen of Victoria Pulse Trading, Andac Kolukisa of Natural Gida, Faisal Bumbia of Bombi’s Group, and Daiyan Adam of Marina Commodities. Their presentations recapped the group’s activities over the past year, including a photo contest, and concluded with Adam relating his experiences as a GPC Young Professional. Those interested in joining or learning more about the GPC Young Professionals are encouraged to visit their Facebook page, follow them on Twitter and Instagram, and send them an email at cicilsyouth@gmail.com to request membership information.

Other than these two sessions, the convention’s second and third days were dedicated to the highly-anticipated market outlook presentations for the various pulse crops.

Red Lentils

The red lentil session was moderated by Peter Wilson of AGT Foods Australia and opened with a presentation by Chuck Penner of Leftfield Commodity Research.

Penner began by recapping the 2016 crop year, which was marked by a large harvest of low-quality red lentils in Canada, the emergence of Australia as a significant exporter, and a generally balanced global demand-supply situation that led to moderate prices. For India, Penner estimated 2016/17 red lentil production at just under 1.2 million MT, which is significantly more than the previous cycle’s production of less than 800,000 MT; consequently, there will be less import demand out of India going forward. In Australia, Penner cited a production estimate of 370,000 MT, down sharply from last year’s red lentil crop, which exceeded 800,000 MT; consequently, Australia will have fewer red lentils available for export this cycle. In Turkey, red lentil production is projected at 370,000 MT, up slightly from last year. And in Canada, red lentil plantings are down 31% compared to last year on reduced pricing; even so, Penner is expecting a 12% increase in yields and better quality due to drier conditions. In terms of the trade, India imported about 830,000 MT in 2016/17, which is about a third less than the previous cycle due to increased domestic production. In Turkey, meanwhile, there has been a strong demand for red lentil imports in 2017. Normally, Turkey imports between 300,000 and 350,000 MT. This year, imports for the first five months amounted to 240,000 MT. In Australia, exports from October 2016 to May 2017 were at 700,000 MT due to last year’s large crop, but they will be lower this cycle, Penner said, on reduced production. As for Canada, Penner projected 2017/18 red lentil exports at 1.7 million MT, down from 1.838 MT the previous campaign. In terms of the values, Penner foresaw a stable to firmer price outlook for this campaign.

Wilson then turned to Merve Fettahoglu of GOZE Agricultural Products for her reaction to Penner’s numbers on Turkey. She reported that red lentil plantings were up in Turkey, and that a new growing area near Anatolia had emerged. She projected 2017 production at more than 400,000 MT. Factoring in old crop carryover, she calculated Turkey’s total red lentil supply at 500,000 MT. On imports, she reported that Turkish buyers are generally happy with Australian red lentils and that they have pretty much purchased all they need for this campaign from that origin; she said that the trade should not expect Turkey to import more than 30,000 to 40,000 MT on top of what it has already purchased.

Next, Anurag Tulshan of Esarco reported on the red lentil situation in India. He pretty much agreed with Penner’s numbers. On production, Tulshan said red lentil production this year came in at nearly 800,000 MT. Current inventories, he said, stand at about 500,000 MT, with 150,000 MT of that amount held by the government as part of its pulse buffer stock and the remaining 350,000 MT comprised of imports. Further, farmers and traders are holding on to 250,000 to 300,000 MT of product. Therefore, Tulshan sees the Indian red lentil market as saturated, with about 800,000 MT still available, which should satisfy demand for at least eight months. He added that prices are currently below the minimum support price, which has led the government to reactivate its procurement programs in order to help growers. Therefore, Tulshan did not see import prices climbing above US$ 500 CNF.

Navaratnam Ketheeswaran of City Mine Company then reported on Sri Lanka’s red lentil market. He began by mentioning that red lentils are eaten daily by 60% of the Sri Lankan population. Imports amount to 150,000 MT per year and the market values quality over price.

Next, Farhan Adam of Marina Commodities commented on Canadian red lentils. The production estimate of 1.8 million MT, he said, assumes average weather conditions, but dry conditions are stressing the crop and may impact yields if moisture does not materialize. Consequently, grower price expectations have increased although international prices are at historic lows due to abundant early buying. Thus, although the Canadian crop may be smaller than expected, prices may not increase because of ample supplies at the major destinations.

In closing, Wilson gave a quick update on the situation in Australia. Red lentil plantings are probably up from last year, he reported, but as in Canada, conditions are dry and yields are in doubt.

Green Lentils

The green lentil panel was moderated by Greg Simpson of Simpson Seeds and opened with a presentation by Marlene Boersch of Mercantile Consulting Venture.

Boersch began by looking at North American production. She estimated 2017 production at 1.365 million MT, up from 1.274 million MT last year. Factoring in the old crop carryover, Boersch pegged the total North American supply at 1.541 million MT; however, she noted that there are quality issues with the remaining inventories, especially with Canadian old crop stocks, and thus it is unclear how much of that volume is exportable. Further, she projected 2017 exports at 1.16 million MT. On U.S. production, Boersch noted that 91% of the lentil area is concentrated in just two states, Montana and North Dakota, both of which experienced drought and elevated temperatures this growing season. As a result, she projected production at 550,000 MT off of below-average yields. Over in Canada, growers in the southern half of the Province of Saskatchewan, which accounts for most of the country’s lentil production, were also contending with dry conditions; as a result, yield projections may need to be revised downward there as well, she cautioned.

On the demand side, Boersch noted that exports were down last year due to the poor quality of the crop, and will therefore need to catch up this year. The top green lentil buyers are India, the UAE, Algeria, Turkey and Spain, with India being the market driver. Two important factors to keep an eye on in India include a final decision on its methyl bromide fumigation restriction and the progress of pulse plantings this season in the face of grower disillusionment over low prices last campaign.

In fact, green lentil plantings may also be down in North America next season due to currently strong wheat and oilseed prices.

Following Boersch’s presentation, Simpson gave a quick update on Canada’s lentil crop. Given this year’s hot and dry conditions, he expected the quality of the 2017 crop to be much better than last year’s rain-soaked production, although yields may be down.

Simpson then asked Pierfrancesco Sportelli of Columbia Grain about growing conditions in the U.S. states of Montana and North Dakota. Sportelli reported that dry conditions, especially in eastern Montana and western North Dakota, were a concern. In Montana, crop losses are expected to more than offset the increase in plantings there. Asked by Simpson to provide a breakdown of U.S. production by lentil type, Sportelli estimated that the U.S. lentil crop is comprised of 60% Richlea lentils, 25% Eston lentils and 15% Laird lentils. He estimated ending stocks at 50,000 to 55,000 MT.

Next, Simpson asked Atheeqe Ansari of Dubai-based Emco International about markets in the Mid-East. Ansari stated that most of the demand in the region is for whole lentils of the Laird type, with Iran being the biggest importer. Last year, because of the quality issues that plagued Canada’s Laird lentils, buyers opted for better quality and competitively priced Richlea lentils from the U.S. instead. Ansari also noted that increasing volumes of lower-quality green lentils are coming into the region from new origins, such as Kazakhstan, and commented that it will be interesting to see how that develops.

Simpson then invited Michael Kemperdick of Schluter and Maack to discuss European markets. Europe’s green lentil demand is pretty stable, said Kemperdick, ranging from 100,000 to 150,000 MT. Buyers there prioritize quality over price, and are therefore eagerly anticipating better quality out of Canada this year after excessive moisture last year ruined much of the Canadian crop.

Kabuli Chickpeas

The kabuli chickpea panel was moderated by Ozan Ozturk of Agrozan Commodities DMCC and opened with a presentation by Chuck Penner of LeftField Commodity Research.

Penner began by recapping recent history. Over the past two years, production has been low in key origins. In response, prices have hit record highs and markets have resorted to greater substitution in terms of caliber and quality.

Looking at the major producers, Penner estimated India’s 2017 crop at around 280,000 MT with practically no carryover. Given that domestic demand is 200,000 MT per year, that leaves India with no more than 75,000 to 80,000 MT available for export. In Mexico, Penner estimated the 2017 crop at 165,000 MT. In Turkey, the government estimated kabuli production at 500,000 MT, but Penner said the industry consensus is considerably less at 125,000 to 150,000 MT. Turning to the Americas, production in Argentina appeared to be around 190,000 MT off a 69% increase in planting and good yields. In Canada, dry conditions have severely compromised the crop and Penner pegged production at 80,000 MT. In the U.S., dry conditions in Montana have similarly impacted the crop, and Penner projected the kabuli harvest for the nation at 250,000 MT.

On pricing, Penner saw no sign of values weakening and expects them to remain at historically high levels. Prices may soften slightly for the smaller calibers, he said, but large caliber prices look to remain strong until early 2018.

Figure 1: Selected Kabuli Price Indications

In terms of the trade, demand from Turkey has been stronger than usual, with imports from January to May of this year exceeding 40,000 MT and exports at less than 5,000 MT. India’s kabuli exports from April 2016 to March 2017 are at a five-year low, amounting to less than 100,000 MT. In Mexico, Penner estimated export availability at 125,000 to 130,000 MT. In Canada, export availability had been pegged at 80,000 MT, but the crop has been deteriorating and Penner revised the number down to 60,000 MT. The U.S., meanwhile, is becoming a major kabuli chickpea supplier; in 2016/17, exports nearly hit 160,000 MT, but this campaign they will likely slip a bit due to reduced production.

Penner then briefly addressed Russia’s production. He estimated 2017 production at 450,000 MT, which is about the same as the previous year, with exports projected at 200,000 to 250,000 MT.

In closing, Penner summarized that the global supply situation remains tight even with some increases in production at the major origins.

Following Penner’s presentation, Ozturk made a few comments regarding Turkey’s production. Last year’s crop came in at about 120,000 to 140,000 MT, and this year’s harvest is estimated to be larger by as much as 20%. On imports, Ozturk noted that Turkey imports about 100,000 MT of mainly small caliber kabuli chickpeas every year, part of which is re-exported or shipped as food aid.

Next, Ozturk asked Navneet Singh Chhabra of Shree Sheela International about India’s kabuli chickpea production. Chhabra noted that early expectations were for a crop of 350,000 to 370,000 MT, but heatwaves in February and March knocked down yields and the production estimate was revised downward to no more than 280,000 MT. Additionally, Chhabra reported that through June India exported about 55,000 MT and given the current high prices he estimated domestic annual consumption at 120,000 MT.

Eleazar Cota Garcia of Alazan then spoke about Mexico’s kabuli chickpea crop. For 2017, he estimated production at 150,000 MT with no old crop carryover heading into the 2017/18 campaign. Demand has been strong. As of the date of the convention, Mexico had already exported 70,000 MT of new crop, which left it with only 30,000 MT still available for export. Consequently, prices have been high at around US$ 2,100 per MT.

Turning to Argentina, Matias Macera of Desdelsur reported that Argentina had a record kabuli chickpea crop in 2016. Exports in 2016/17 amounted to 150,000 MT. Further, 2016/17 saw a new buyer emerge: the U.S. pet food industry purchased a few thousand metric tons of Argentine kabuli chickpeas, Macera noted. As for the 2017 crop, planting concluded around mid-June. Further, Argentina has been experimenting with new varieties and Macera expects the 2017 crop to include 35% to 40% of product of 9 mm caliber. On pricing, Macera provided the following values: US$ 1,100 per MT for 7 mm; US$ 1,200 per MT for 8 mm; and US$ 1,350 for 9 mm.

Ozturk then asked Max Hinrichs of Hinrichs Trading Company to speak to U.S. production and consumption. On production, Hinrichs concurred with the numbers presented by Penner. On consumption, he cited the USA Dry Pea & Lentil Council’s estimate of 10,000 MT per month and noted that it is trending upward. During the Q&A, Hinrichs offered the following pricing for 2017/18: US$ 1,300 to US$ 1,350 CNF for 8 mm; US$ 1,400 to US$ 1,450 CNF for 9 mm; US$ 1,500 to US$ 1,600 on 10 mm.

Desi Chickpeas

The desi chickpea panel was moderated by Sudhakar Tomar of Hakan Agro DMCC. Marlene Boersch of Mercantile Consulting Venture returned to the stage to deliver the opening presentation.

Starting with production, Boersch noted that the combined output of the major players ranges between 9 million and 11.1 million MT per year, with India being responsible for most of that volume. Australia’s desi chickpea production, though, has increased by 411% from 2010 to 2016, and the country has emerged as a significant player in the desi chickpea trade. Russia has also seen a big increase in its desi chickpea output, up 551% over the same period. India, however, has faced challenging weather the past two years, and its production fell off by 6%. In summary, Boersch calculated that from 2010 to 2016, global desi chickpea production increased by 18%, adding approximately 1.6 million MT to the worldwide supply.

Figure 2: Desi Production Overview

For 2017, she estimated an increase of 585,000 MT in worldwide production, up 6% over last year. Her 2017 production estimates for the major players are shown in the table below; Boersch noted, however, that due to weather issues, it is still too early to estimate production in certain origins, such as Australia, with much confidence.

Desi Chickpea Production for the Major Players (in MT)

 
COUNTRY 2016 2017
Australia 2,000,000 1,500,000
Canada 85,000 110,000
Ethiopia 450,000 450,000
India 7,060,000 8,100,000
Myanmar 550,000 550,000
Russian Federation 280,000 300,000
Tanzania 130,000 130,000
TOTAL 10,555,000 11,140,000
 

Switching over to the demand side, Boersch noted that India’s imports have increased by 730,000 MT (up 600%) from 2008 to 2016. Bangladesh has also increased its imports; over the past five years, imports from Australia alone have increased by 240,000 MT (up 45%). In Pakistan, meanwhile, imports fell by 125,000 MT (45%) over the past five years as consumers there switched to more competitively priced yellow peas. All told, from 2013 to 2016, desi chickpea imports increased by 600,000 MT.

Chickpea Imports for Major Markets (in MT)

 
COUNTRY

2016

2017 (projected)

India

538,000

874,000

Pakistan

61,000

102,000

Bangladesh

200,000

159,000

TOTAL

799,000

1,135,000

 

The top desi chickpea exporter is Australia, which dominates the Indian market. Russia is a distant second.

In terms of the current picture, movement has slowed down as Australia’s stocks have run low. As always, production out of India will be the determining factor in 2017. It appears plantings will be down there on low prices. In Australia, the seeded area is up, but challenging weather has cast doubt on yields.

Following Boersch’s presentation, Tomar then remarked about the versatility of desi chickpeas and the favorable returns that all the players along the value chain have been reaping recently. Then, acknowledging the importance that India’s production has on the overall trade, he asked Rajul Sarda of Rajat Agro to sum up the present situation there.

Sarda began by recapping India’s production problems last year. He estimated India’s 2016 desi chickpea production at less than 5 million MT. In response, prices nearly doubled. For 2017, Sarda estimated production to come in under 6 million MT, which falls short of domestic demand. Although India has already imported significant volumes, Sarda said more supplies will be needed. Looking ahead to 2018, he anticipated a massive increase in production, especially considering the low prices for lentils and yellow peas.

Sanjiv Dubey of GrainTrend then spoke about production in Australia. He agreed with Boersch’s numbers for the 2016 and 2017 crops. The planted area this year is similar to last year’s, he noted. However, the 2016 harvest saw exceptional yields (nearly 2 MT per hectare). This year, it was still too early at the time of the convention to know how the yields would turn out. Dubey therefore suggested taking the long-term average of 1.5 MT per hectares. Based on this assumption, he calculated a preliminary production estimate of 1.5 million MT, which matched what Boersch had reported. Currently, Australia is experiencing dry conditions in major chickpea growing areas. The situation is not yet critical, Dubey assured, but unless additional moisture arrives before harvest, yields could be affected.

Faisal Anis Majeed of Bombi’s Group then gave the view from Pakistan. He concurred with Boersch’s numbers. On production, he reported that the expectation was for a crop of 250,000 MT due to lack of moisture. Over the past nine months, Pakistan imported approximately 400,000 MT, mostly from Australia. In 2018, given the good monsoon rains Pakistan received this year, Majeed expected production to rebound.

During the Q&A, panelists were asked for their price estimates. Sarda said that if all goes well, he expected to buy at US$ 625. Dubey said, barring a major weather event, he would expect prices for Australia’s new crop, harvested in October/November, to remain at current levels, around US$ 725 to US$ 730. Majeed cited current prices at US$ 750, but because Pakistan’s inventories are presently full, he didn’t foresee buyers willing to pay more than US$ 700.

Another audience member asked for import estimates for Pakistan and India in 2017/18. Majeed forecast Pakistan’s imports at 100,000 MT assuming a good monsoon and domestic production of 600,000 MT. Sarda, also assuming a good monsoon, estimated India’s imports at 700,000 MT. Overall, including Bangladesh and other markets, Tomar estimated the desi chickpea trade for 2017/18 at 1 million MT.

Photographs of the convention and videos of all the sessions, as well as their presentations, are available at Pulses2017.com. A delegate log-in is required.

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Dario Bard, IFT Journalist