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Pulse Market Insight - Issue #116

Posted: November 20, 2015 | By Communications Coordinator

Chickpeas – The Forgotten Pulse Crop

There’s been so little happening for so long in North American chickpea markets that it seems the crop has fallen off the radar. Chickpea prices on both sides of the border had been flatlining for a couple of years and were avoiding all the “excitement” in other pulse markets. Until recently, movement of chickpeas off Canadian farms was very slow and that had discouraged enough farmers that 2015 acreage dropped over 30%.

Now however, both prices and movement have perked up in both Canada and the US. Bids for 9 mm kabulis (the main type grown in Canada) are now in the high 30s, a level not seen since mid-2013 and even desi chickpea prices are in the high 20s. Exports had already started to ramp up this past summer but the price effect didn’t show up right away, simply because on-farm supplies were large and farmers had been anxious to sell chickpeas they had held for a year, if not longer.

Just like other pulses, India is one of the key catalysts for the stronger chickpea market but it certainly isn’t the largest buyer of Canadian chickpeas by any means. India is actually an exporter of kabuli chickpeas and a poor 2015 crop reduced its exportable supplies. For desi chickpeas, India is the world’s dominant (by far) producer, importer and consumer and its smaller crop has sharply increased its import needs from any possible sources, especially Australia.

At the same time, two other key kabuli producers also experienced problems. The 2015 Mexican crop (mainly large calibre kabulis) was down 23% from the previous year, which was the third straight year of smaller crops. In Turkey, the size of the 2015 kabuli chickpea crop was roughly on par with the previous year, but reports from the country indicate the quality was damaged by harvest rains.

More recently, the Australian chickpea crop (90% desis) was headed for a new record, close to 1.0 million tonnes. While the quantity may still be large, the quality has suffered due to rains at harvest. While exact estimates aren’t available yet, this likely means fewer supplies are available for export to India.

Prices for both desi and kabuli chickpeas in India have continued to strengthen, in spite of the recent government interference in the market. It appears the inventory limits and raids on stockists haven’t had any long-lasting or measurable impact on chickpea prices.

Another reason for the strength in the Indian market is that traders already have one nervous eye fixed on the rabi crop that’s now being planted. Despite government announcements of increased plantings this year, the historical data actually shows 2015/16 planting is trailing last year and the 5-year average pace by roughly 35%. Farmers are holding back from planting and are waiting for rain before proceeding. So far, little rain has fallen and the current dry season makes it less likely to occur.

The Mexican kabuli crop is also being planted at this stage of the year. Prices that Mexican farmers see (in pesos) are favourable and should encourage planting. The only hitch is that areas in the far northwest of the country where garbanzos are grown have seen below average rainfall this fall, and that could limit acreage.

Even if the 2016 Indian and Mexican kabuli crops turn out okay, they won’t arrive on the market until the harvest around March. With limited supplies of old-crop kabulis available until then, there’s little chance of a drop in prices in the short-term. And if those crops run into trouble, there is considerable upside potential, both for the rest of 2015/16 and into the first half of the next marketing year.

The stronger market is starting to raise Canadian farmers’ interest in planting chickpeas in 2016. While we haven’t seen any new-crop bids for kabuli or desi chickpeas yet, we would expect prices would be more attractive than they have been the past few years. With renewed optimism among farmers, acreage will very likely increase, with seed availability the main limiting factor.

Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.

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