Feb 0324: Red Lentils

Red lentil prices are basically sitting there. This is the calendar point where it’s foolish to offer a compelling fresh opinion. Why? Everybody always looks to India for guidance, and rabi crop pollination occurs in February. February to India’s chickpea, lentil and field peas is like July to Saskatchewan.

We know Australia recently harvested a bigger red lentil crop than Canada’s 2023 crop, first time ever, meaning a long tail of competitive offerings from two exporters. We also know that India will have a batch of freshly harvested market ready supply April forward. These will act as headwinds for months.  We also believe that India domestic pigeon pea price should remain high until respective Nov-24 harvest repopulates new crop supply. Acting as a pigeon pea substitute, this means India sustains inflated red lentil consumption, likely by 0.75-1.0 MMT beyond normal.

Western Canada farmers always have the insight, a calendar benefit of India rabi crop prospects, before own seeding begins.

Read More

Red Lentil Update Mar 12-23

Pigeon peas are a deficit crop balance calendar 2023.  India would normally be expected to produce about 4.25 MMT and import about 0.75 MMT a year from Myanmar and East Africa.  India pigeon crop size was forecast by government at 3.6 MMT but trade perceives and price is behaving as if its lower.  This past week, Tamil Nadu allowed its 20,000t tur dal tender to include split dehulled green lentils.  This can incrementally help feed discretionary green lentil demand, but north half of India can engage in substitution with a modestly cheaper red lentil, and in doing so free up more supply for those that must have higher priced pigeon peas in their diet.  Substitution demand is a boring calendar year grind.  Patience is required because secondary demand is different than primary demand.

We must also chew through remaining market ready supply from Australia (ABARE estimated it at a monstrous 1.4 MMT) and from summer Canada/Kazakhstan harvests, made easier if price of competing crops soften.  Remember that importer affordability issues remain.  The world has to grow into Canada’s price, yet pigeon pea is all you need to know why directional risk for red lentils ought to be grindy-higher into later 2023.  Averaging various India domestic points would suggest red lentils being about Rupee 1500 per 100 kg cheaper than pigeon pea, or about US $185/t.  This a big deal.  This and many other trend price expectations have been researched.  Please flip me an email or call.


Read More

Red Lentil View Aug 09-22

No matter what crop size Canada harvests, there is no lentil shortage without India being an import threat.  In that regard, opinion is that India has a food inflation challenge.  Domestic wheat and rice prices are strong.  Pigeon pea prices are on fire.  India domestic red lentil trend has been flat for several months, but the risk is for the trend to turn northward into autumn.   India announcing an extension of zero lentil import tariff through to March 31-23, two months sooner than need be, is viewed to give trade advance certainty should trading market conditions align.  Australia and Kazakhstan are to provide other importer choices.

For larger price moves to happen, must involve (i) user panic, (ii) farmer panic, (iii) frontload trading demand with a long or short positional bias taken by traders.  Feels realizing to me.  Have carved out a risk reward conclusion, and it starts with staying glued to India domestic pricing.  Please contact me for more detail

Read More

June 07-22: Pulses Grinding Along

Situation and prices seem to be in a sweet spot because

(i) Farmers have limited interest to supply-push sell. Why?  Competing crop prices are strong, supplemented with a calendar date where it’s easy to be concerned about agronomic risks.

(ii) Consumers and importers have limited interest to demand-pull buy, rather pick away in hand to mouth fashion. Why?  Financial, logistical & political headaches, anticipation of a cheaper new crop reload with price perceived to be high only because of war.  Further, India is not perceived to be a volume import buying threat, while new crop growing conditions are good enough to justify idling.

(iii) Anticipatory trading demand, which is code for speculative positioning, is subdued because a confident directional price bias is lacking. Between war, politics, logistics, inflation, weather possibilities, benign supply/demands and perception of steady to strong consumptive demand, most cannot deviate from a see how it goes bias today.

Exceptions exist.  Example chickpeas.  Please contact me for more detail.

Read More

Nov 03-21: Pulse Notes

Normally at this calendar point, there is a lot going on in our pulse world.  Not so much this year.  Little is changing but neither are core expectations as described in recent research.  Users got immediate fill late summer and have a handful of reasons to lay low.  Logistics are fueling necessary rationing.  Red lentils have other headwinds like uncertain India policy (stock limits and import tariff), and another import choice, which is Australia that everybody on this planet knows about.  Domestic, including pet food, generally provides bulk of immediate interest.

Anticipated end demand result is this.  Exporters, resellers, brokers and users have reasons to keep positions small.  Trading demand is subdued, yet consumptive demand rolls along.  Instead of more conventional sugar-rush all-or-none moments, anticipatory trading demand is contained.  This instead means a shallower less volatile but elongated trading demand period, that may only convey spunk later winter.  Every pulse has a different tweak and positional starting point.  This has been researched.  Drop me an email for more information.

Read More

July 26-21 India Lowers Lentil Import Tariffs

India government just lowered the lentil import tariff by 10% and lower the Agriculture Infrastructure Development (CESS) by 10%.   A net 20+2% import tariff reduction.    Effective date looks to be July 27, with no mention of an expiry date either in writing or from parliamentary video feed.  An expiry date would be preferred but means little right now because all know that amendments can occur at anytime. Given India stock limits and risk of policy amendments at a whims notice, trading demand is unlikely to carry same anticipatory behavior as before.  Further, volume and fluidity is impaired because container logistics are a mess.  Yet this policy announcement underscores a core fundamental piece to big picture view…..India is pulse deficit.  Smaller to mediocre crop size in Canada should harmonize with India being a greater import threat to sustain upward price risk.  Maybe a little sooner now in context of front loading trading demand.

    Read More

    April 24-21: Understanding Cycles with Red Lentils

    Four basic market scenarios that define core lentil price cycles.  This concept is applicable to many commodities in our Ag space, it’s just that lentils are cleaner to understand because of their uniqueness and limited substitution traits.  It has to do with directional change with regard to importer and exporter inventory.  Please call or send me an email and I’ll share the detail.

    Read More

    India Chana Harvest – Important to our pulse space Feb 27-21

    India government released its Second Advance Production Estimates this week for a number of crops.  Chana production, equivalent to desi chickpea type, whose harvest has just begun and will be in full swing last half March, was pegged at 11.6 MMT versus 11.1 MMT last year if believe the government, and 9.5-10.0 MMT if believe the trade.  A number of industry participants believe this year’s chana crop is closer to 9.5-10.0 MMT.  Difference would have significant market implications that apply to all classes of chickpeas, lentils and possibly field peas.  It’s must have knowledge and implications if a Canadian pulse grower.  Shoot me an email and I can shed insight.

    Read More