Turbulence Ahead for Peas?
The beginning of February marks the start of the second half of the marketing year. The first half of 2024/25 was mostly positive for pulse markets but there could be more turbulent times ahead. Typically, the last half of the marketing year is a lot quieter but this year, trade issues could be throwing several wrenches into the works.
As always, India is front and centre when it comes to pulse outlooks and that’s certainly the case again this year. Import tariffs for yellow peas were set at zero just over a year ago, which allowed a big increase in Indian imports, largely from Canada and Russia. Several deadlines to reinstate tariffs have come and gone, with February 28 as the latest. As supplies of imported peas grew and prices declined, the Indian trade has increased its pressure on the government to reimpose tariffs. Now there’s another signal that the government will return to its previous tariff policy.
Last week, yellow pea prices in India jumped nearly US$50 per tonne after a long series of declines. Possibly not coincidentally, this occurred at the same time as a major convention for Indian pulse traders. This raises the possibility that government officials have tipped their hand about restricting imports with tariffs after February 28.
Canadian exports of yellow peas to India have already been declining in recent months, with only 22,800 tonnes in December, but a shutdown in that trade would be damaging. Through the first five months of 2024/25, Canada has exported 675,000 tonnes of yellow peas to India, 55% of the total. While other countries like Bangladesh have stepped up to buy more in recent months, the absence of India would put a damper on movement of yellow peas.
That said, there are a couple of glimmers of hope for this situation. Indian farmers have responded to the lower prices and cut back on seeded area of peas. The latest reports show 22% fewer acres of peas this year. Satellite vegetation maps show conditions are better-than-average but not as good as last year, suggesting a smaller crop is coming in the next few weeks. Seeded area of chickpeas is also below average, which would mean those supplies will also not be large. One possible outcome is that yellow pea tariffs are reimposed but may not last long. That said, India will need to consume its large inventories of yellow peas and desi chickpeas before prices will rise enough to convince the government to open its doors again.
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