India’s appetite for pulses up and down

Australian growers have been advised to keep their finger on the pulse, with price fluctuations for chickpeas and lentils this year set to hinge on developments in India.

The biggest consumer of pulses in the world, India in recent years has sought to ramp up domestic production of legumes, growing from 16-17 million tonnes in 2016-17 to 23-24 million tonnes in 2017-18.

But while this has affected India’s import appetite for pulses, including those from WA, the market still presents an opportunity for Australian growers, according to Rabobank senior grains and oilseeds analyst Cheryl Kalisch Gordon.

“We have seen a significant uplift in India’s pulse production over the past couple of years,” Dr Kalisch Gordon said.

“A lot of this has been put down to the ‘monsoon effect’ — a couple of favourable years of monsoon — and while that is overridingly still the biggest driver of production in India, there have also been increases in productivity due to government support programs and increased price support, which has encouraged production.”

While it was unlikely India would return to the market as a significant pulse importer, there was some scope for change.

Current dry conditions as well as a reduction in Indian (rabi) pulse plantings — down around 10 per cent on last year, according to Indian government data — could result in India’s overall crop this year coming in 7 to 8 per cent lower than last year.

“If the so-far less-than-favourable monsoon season continues, we could see India come back into the market looking for imports,” Dr Kalisch Gordon said.

For changes in policy though — such as the extension of temporary bans, the opening of doors for any imports like yellow peas or the removal of tariffs — we expect we’ll need to wait until closer to the middle of 2019 and after Indian general elections.”

Dr Kalisch Gordon said the result would be that pulse markets would “continue to be on a rollercoaster”, but they would have a positive trajectory given the growth prospects for the Indian market.

“The dry conditions experienced for the current Indian crop, reduced Indian government stock levels as well as lower new crop supply availability from Canada and Australia could see pricing find some further strength above prevailing levels.”

Dr Kalisch Gordon said elevated levels of Australian and, to a degree, Canadian lentil stocks were expected to limit much more upside in pricing for the legume, despite low new crop supply.

However, she said there would be more upside in the chickpea market, given Australia’s current low stocks and small 2018 harvest.

“However, the Indian reinstatement of another three-month ban on the import of dry peas at the beginning of January does not suggest that India is near to removing pulse tariffs, which is a dampener on the upside prospects for chickpea prices,” she said.