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Pulse Market Insight

Pulse Market Insight
 
What’s Up with the Quiet Export Demand Early in 2017/18?
 
Pulse exports normally peak in the first 2-3 months of the marketing year but it seems we’ve gotten a little “spoiled” the last couple of years when those early-season volumes were extreme. Poor crops and very low old-crop pulse supplies in key importers, particularly India, caused anxious buyers to book larger volumes before harvest and heavy purchases continued throughout the harvest, keeping prices elevated.
 
Export volumes in August can be a little iffy, depending on harvest timing, but September is clearly the big month for peas. In two of the past three years, September pea exports have been over 700,000 tonnes and over 40% of annual volumes have typically moved in the first quarter.
 
 
With lentils, the surge in exports occurs a bit later with heavier volumes from September to December, and October is the peak month. For both crops, the early harvest and heavier movement allow the market to clear a good portion of newly harvested supplies before crops like wheat and canola start filling the system.
 
These peaks in export volumes early in the year have a few implications. First, quick movement means farmers don’t need to store as much crop and provides earlier cash flow, allowing more measured marketing of other crops. Strong demand in the first few months also helps prices recover a little more quickly from the seasonal lows than they would otherwise.
 
It looks like 2017/18 isn’t quite shaping up that same way. Fewer peas and lentils were booked prior to harvest, even with early concerns about dry conditions reducing yields. Traders have indicated the pace of pea purchases is a little stronger than lentils, but both crops are getting less love from overseas buyers. These delays are more of an issue for yellow peas and red lentils than green peas and lentils since greens tend to move more evenly throughout the year anyway.
 
Buyers can afford to be more patient this year. Imports in the summer of 2017 were relatively strong and that’s helped build up inventories, especially of yellow peas and red lentils in India. In addition, Indian farmers grew larger crops of peas, lentils and other pulses in the past year but have been reluctant sellers. That means inventories of domestically produced pulses are larger than they’ve been the last couple of years.
 
So what does this mean for farmers growing peas and lentils? First, yellow pea and red lentil bids for fall delivery will be subdued, not prone to rallies. In fact, if farmers get more impatient and start selling the crop more heavily, prices could see some more serious downside.
 
It’s also likely that the normal seasonal price recovery following the harvest lows will take longer to develop and be a little weaker, due to soft export demand and heavier farmer selling. Prices through the rest of 2017/18 could also be fairly flat, although other market developments (such as the Indian rabi crop) could show up that change the outlook.
 
One exception to this situation is kabuli chickpeas, with global supplies still extremely low, especially for the larger calibres. That’s meant attractive new-crop bids and strong off-the-combine movement will be a feature, at least for the next few months.
 
In general for pulses, 2017/18 seems to be shaping up to be a more low-key marketing year than the last couple of “exuberant” seasons. Screaming rallies are a lot less likely given current market sentiment and trying to wait for the high price point will likely make less of a difference.
 
 
Source : Albertapulse

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