Pulse Market Update

Diminishing demand for the Australian desi chickpea production in export markets, coupled with reduced yields and quality compared to the 2016 Australian season, has seen an overall reduction in the chickpea market.

On the supply side, the Australian desi chickpea production in the 2017-18 season is expected to be down significantly this year, dropping from 2.00 to 1.09 million metric tons (MT). Transitioning from a record breaking crop back to an average size crop.

Australia relies on demand from the Indian subcontinent to consume its crop. Earlier in the season, processors and exporters were encouraged by trade expectations that the Indian subcontinent’s seeded area would decline during the coming Rabi cropping season, giving a supportive tone to the market.

However, last week, this season’s Minimum Support Price* (MSP) has been set at 4200 Rs/100kg (USD 653 /mt). This is up 9% from the previous year (USD 601/mt), while the MSP for 2018 crop red lentils is Rs 4150 or $644 MT, up 8%. The higher MSP incentivises Indian farmers to increase planting in the upcoming crops. These increases were expected as the country’s desire to make domestic pulses become self-sufficient in the coming years is widely known.

News headlines in India report that the Indian government is considering either implementing import quotas and/or import duties on all pulses, however it is said to be most likely yellow peas and lentils. If India extends current policies for tur or pigeon pea, mung beans and black mapte to rabi season pulses, imports will be capped and exports will be allowed.

On lentils, international lentil markets continued to soften during the past week as supplies available from exporters and growers remain ahead of the short term needs of buyers. The North American harvest is complete and Canadian quality is considered excellent, increasing competition for demand from markets which insist on good No 1 and No 2 grade product.

Similarly, field pea markets continue to exhibit a softer undertone against slowing export movement and continued talk of possible actions by the Indian government to further limit pulse imports. India’s newspapers continue to focus on discussions within the Indian government about bringing back import duties on all classes of pulses.

* Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). MSP is price fixed by Government of India to protect the producer – farmers – against excessive fall in price during bumper production years. The minimum support prices are a guarantee price for their produce from the Government. The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.