Keeping tabs on export competitors is an important part of understanding and forecasting market direction. It’s easy to focus too closely on what’s happening in western Canada and forget about crops in other countries.
The Australian pulse harvest takes place a couple of months after Canadian pulse crops come off, and exports are mostly headed to the same destinations. Because of Australia’s proximity to South Asia, the country often has a large freight advantage but overcapacity in bulk and container shipping has reduced that location benefit this year.
Just like in Canada, Australian farmers have experienced some big shifts in weather during their growing season, especially on the east coast, and they’re not through yet. The chickpea crop in Queensland and New South Wales has seen even more ups and downs than the Saskatchewan lentil crop this year. Conditions in southeast Australia and western Australia were generally much more favourable.
In addition to the weather, the main factor in this year’s crop story was the big increase in acreage. For chickpeas, lentils and fababeans, farmers planted record areas in response to favourable price signals. And with the Australian planting window very wide, there’s still disagreement about how many hectares were actually planted, especially for chickpeas.
While Australian pulse aren’t in the bin yet, they’re moving toward record potential and that has important implications for export markets. The largest impact is the chickpea crop, mostly made up of desis, but that’s also where the most uncertainty lies. Some have suggested seeded area is a lot larger yet than shown in the chart, but continuing wet weather is also playing havoc with yields. The current government forecast is 1.2 million tonnes, and buyers in south Asia and surrounding countries are counting on a large surge in imports from Australia. If they arrive as advertised, Indian prices of desi chickpeas and yellow peas will come under pressure. But if production falls short of expectations, India will be more dependent on its own rabi crop in February and March, and that will keep chickpea prices elevated.
The Australian red lentil crop is in good condition and a record crop is quite likely. That said, output is currently forecast at 365,000 tonnes, so it’s not in the same league as the Canadian crop. Still, on top of record Canadian production, this Australian crop is large enough to add more weight to prices.
Australian peas will likely play a smaller role in that market with just over 300,000 tonnes forecast. Like lentils, it would help boost available supplies for Indian buyers, but isn’t large enough to seriously change market direction. For the global pea market, the size and quality of the desi chickpea crop is a more important influence.
Record production is also expected for Australian fababeans, with a crop approaching 500,000 tonnes. That’s several multiples of the Canadian crop and does have the potential to depress export markets. Australia already has strong connections to Egypt, the world’s largest importer, and that will make it more difficult for Canadian exporters to compete there.
Source : Albertapulse