Forecast ahead for choppy chickpea values

Volatility expected in pulse pricing until more is known about the Australian crop


Grow Queensland
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UPDATED: There is potential for further volatility in the pulse market. Take our quiz - how well do you know your pulses.

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Chickpeas in the northern cropping belt look good for now, but growers say more rain is required to achieve average yields.

Chickpeas in the northern cropping belt look good for now, but growers say more rain is required to achieve average yields.

A LARGE year on year cut in Pulse Australia’s chickpea production estimates may not be enough to stop global prices for the legume falling after two years at near record levels.

Earlier this month, Pulse Australia came out with its first forecast for the season, predicting total chickpea production of 1.5 million tonnes, a figure still substantially above long term averages.

The estimate, which leaves the 2017-18 crop some 600,000 tonnes short of last year’s record production of 2.1mt, has been noted across the globe, with Australian chickpea prospects likely to play a key role in setting price for the upcoming season.

“There is the potential for volatility there,” said Independent Commodity Management (ICM) advisor Andrew Cottle at a forum held as part of Queensland Country Life’s Food Heroes event in Toobeah in southern Queensland last week.

“With the crop here in southern Queensland and northern NSW on a bit of a knife edge, we will learn more as the weather situation becomes clearer,” he said.

“If it stays dry, then current values of around $700-800 a tonne could easily remain, but if the crop gets sufficient rain then there is probably price downside risk.”

He said India had enjoyed a markedly better start to its monsoon season this year which would improve production forecasts for the 2018 crop.

The Indian monsoon begins in May and lasts in key chickpea producing regions such as Madhya Pradesh, Uttar Pradesh and Maharashtra until around the start of October.

Mr Cottle said one of the reasons for the volatility in pulse markets was the lack of a hedging mechanism.

Independent Commodity Management's Andrew Cottle told the crowd at the Queensland Country Life Food Heroes event last week that there was the potential for volatility in global chickpea markets this year.

Independent Commodity Management's Andrew Cottle told the crowd at the Queensland Country Life Food Heroes event last week that there was the potential for volatility in global chickpea markets this year.

“It is not like the wheat market where you can hedge against risk so that means there can be some big moves as people seek to ensure they have sufficient supply.”

Chief executive of Pulse Australia Nick Goddard said the exact size of the Aussie crop would be determined by weather.

“We know people wanted to find room in their rotations for chickpeas given the pricing signals at sowing, but there were some people with insufficient moisture,” he said.

“There has still been a significant plant of chickpeas, now we have to see what the season throws up.”

In terms of other major pulse crops, Mr Goddard said there was likely to be a substantial fall in lentil production to around 370,000 tonnes, down from 800,000t last year.

“The dry conditions in major production areas like the Yorke Peninsula in South Australia were a big reason for the smallish estimate, however since then there has been some rain in SA so hopefully that number is on the low side,” he said.

Nidera Australia pulse trader Rob Brealey said the news was generally muted on the lentil pricing front.

Speaking following the Pulses 2017 event in Vancouver, Mr Brealey said the trade generally thought there were adequate pulse stocks globally.

“The general consensus was that the importing countries were holding far too much stock and despite smaller production in the major exporting countries, it would take quite a while to chew through these stocks,” he said.

“Price trend is therefore expected to be steady to slightly lower.”

In terms of chickpeas, Mr Cottle said Australia had been the beneficiary of voracious demand from the subcontinent in recent years, spurring the massive growth in Australian chickpea production in recent years.

“There are two factors to consider, firstly there is a massive spike in demand for the product in India.

“In spite of the high pulse prices on offer in India, government policy means farmers are leaning towards growing cereal crops which has been part of the reason Australian chickpeas have been in such demand.

“It is hard to overstate just how big this demand has been – we’ve grown crops that have smashed previous records in terms of production and India has just kept on soaking up the excess, at a good price.”

“The other reason has been two consecutive seasons with poor monsoon rain in India and also in neighbouring countries such as Pakistan.”

Mr Cottle said the scorching demand for chickpeas, which has seen Aussie prices for desi type chickpeas smashing through $1000/t, had also been noted in other areas.

“Places like Russia, which haven’t grown a lot of chickpeas , have put in a markedly bigger plant this season, it’s the old adage that nothing cures high prices like high prices, with the price signals like this you will see more people planting the crop.”

Nidera Australia pulse trader Rob Brealey says pulse plantings will increase in non-traditional areas such as Europe and even North Africa.

Nidera Australia pulse trader Rob Brealey says pulse plantings will increase in non-traditional areas such as Europe and even North Africa.

It was a point backed up by Mr Brealey, who said Russian and Ukrainian plantings of pulses were well up.

In addition to this, he added EU countries were also ramping up production, while advances in farming technology mean semi-arid North Africa is also being seen as a possible growth region for the production of pulse crops.

Mr Cottle said crops such as the Canadian yellow pea crop, which is a partial substitute for chickpeas in certain application in Indian cooking, would also have an influence on the price of chickpeas.

Other major pulse crops will continue to trade primarily off livestock field values.

Mr Brealey said supplies of field peas may become tighter in 2018, while he said feed millers would continue to provide demand for faba beans.

In terms of the overall pulse complex, Mr Brealey said the giddy heights of the past two years may not be achieved this year and he cautioned there may be price volatility in coming months, he said he felt the long term outlook for legume prices remained healthy.

The story Forecast ahead for choppy chickpea values first appeared on Queensland Country Life.

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