Commodity Commentary. Poor Canadian crop conditions changing fundamentals in pulses market

Deviating from the earlier optimistic expectations of a repeat of last year’s large crop size, Canadian pulses (mainly field peas and lentils) being harvested currently is under stress with respect to quality while unfriendly weather has reduced yields, according to industry representatives.

As for dry peas, the acreage is up this year (2014-15) by a fifth to 3.9 million acres. But production is estimated at 3.6 million tonnes, down from previous year’s 3.9 mt . Ending stocks are likely to be lower.

However, the most significant aspect of this season’s harvest is the suspect quality of crops, according to Heidi Dutton representing ADM, a large agri-business corporate.

Only 19 per cent of the current pea crop is Canada grade 1 while as much as 52 per cent is grade 2. Many industry participants recognise the quality issue and allude to the quality complaints that Canadian peas encountered in 2010.

Like peas, Canadian lentil crop too is facing lower production and quality issues. While the acreage is up from 2.6 million acres last year to 3.1 million acres this year, production is estimated to come down to 1.9 mt against 2.2 mt last year.

Lentils ending stocks are expected to reach the lowest levels since 2010-11, Dutton said.

Quality issue in lentils this year is what the trade fears. Nearly half of the production is grade 3. Red lentil is the worst affected in terms of quality, according to Martin Chidwick of Agrimonde.

He told BusinessLine that quality variation in red lentil harvest is reflected in the wide price variation in the export market.

Offers are said to range from $650 a tonne to over $900 a tonne.

The deterioration in Canadian pulse crop conditions combined with the ongoing transport bottleneck has put a new spin to the world pulses market fundamentals.

The supply, especially of quality crop, is likely to be tighter than anticipated at the beginning of the season.

Canada is among the world’s largest exporters of pulses and India’s strong trading partner. Together, with India’s lower pulses harvest (5.2 mt) in the kharif season, developments in Canada, importantly in the Saskatchewan province, have sent pulses traders scurrying to cover their requirements.

Exporters are now closely watching the situation in India, especially the upcoming rabi planting. Some of the important growing regions received substantially less than normal precipitation. Soil moisture conditions are therefore less than satisfactory.

Grown during the rabi season, chana or gram or desi chick peas is the largest pulse crop accounting for nearly half of the total annual production.

With prices ruling well below the minimum support price of ₹3,000 a quintal for over a year now, will growers still opt for the chana crop and deliver a bumper harvest? Doubts persist.

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