australian pulse september th market news · 2016. 6. 12. · thaustralian pulse market news –...

Australian Pulse

MARKET NEWS

www.pulseaus.com.au

SEPTEMBER 20th 2013

This edition of Australia Pulse Market News reports on the forecast for global pulse production with the northern hemisphere harvest underway. The Australian pulse harvest will commence in Queensland next month for chickpea, for other pulses in late October and November. Pulse producers should consider the current market conditions and determine whether to forward sell a portion of the crop, look to cash sales at harvest or store pulse grain to sell in the New Year.

The prospects for good yielding pulse crops in Canada and the sub-continent for the forthcoming Rabi (winter) crop may ease urgent demand for pulse grain in the short term. Additionally, the currency problems in the sub-continent are causing extra marketing difficulties for Australian pulse exporters.

Contents World markets ........................................................................................................................................... 2

India .......................................................................................................................................................... 3

Canada ..................................................................................................................................................... 3

China ........................................................................................................................................................ 5

Europe ...................................................................................................................................................... 6

Australia Pulse markets ............................................................................................................................ 6

Field pea ............................................................................................................................................... 6

Faba Bean ............................................................................................................................................. 7

Chickpea ............................................................................................................................................... 8

Lupin ..................................................................................................................................................... 9

Soybean market .................................................................................................................................. 10

Lentil.................................................................................................................................................... 11

Financial News........................................................................................................................................ 12

Australian Pulse Market News – September 20

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Australian Pulse Market News

World markets Global pulse production has varied with indifferent seasonal conditions in recent years.

The table shows the pulse production in Australia‘s principal competitors in world trade and India’s domestic production. The year to year changes help to explain some of the recent influences on Pulse grain markets in Australia

India’s production in 2012 fell 1.3 million tonnes, requiring heightened imports to feed the population

Myanmar’s production is mostly stable

Canada’s production fell markedly in the very wet season of 2011. It recovered in 2012 but was 600,000 tonnes short of the 2010 level

China’s pulse production is rising but is very much short of domestic demand

Brazil production is mostly stable. It has limited export potential

USA and Mexican pulse production fell markedly in the drought of 2011. Mexico is a strong marketer of large Kabuli chickpea

Turkey’s production of desi chickpea and lentil has been stable

France suffered a drought in 2012 which required significant imports of vegetable protein for livestock, causing a rise in Lupin values. It also reduced their exports of beans to the Middle East, resulting in our strong faba bean markets in the last two years

Globally, pulse production has been stable.

Global production of pulses (metric tonnes)

2012 2011 2010

India 16,280,000 17,647,000 17,236,300

Myanmar 5,335,290 5,283,113 4,491,989

Canada 4,726,760 3,882,900 5,347,300

China 4,262,000 4,610,498 3,890,693

Brazil 2,843,405 3,455,947 3,172,163

USA 2,357,134 1,484,567 2,594,682

Mexico 1,312,209 778,508 1,429,245

Turkey 1,308,527 1,234,281 1,344,882

France 884,653 1,058,879 1,609,959

Global Pulse Production total 74,680,680 72,828,959 73,517,603

Source: FAO Stats Sept 2013


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India The Indian Kharif (summer) planting is almost complete. The Indian Department of Agriculture has forecast that the area planted to pulses is around 5% above the total for last year to be 10.32 million hectares. The current five-year average is 10.26 million hectares. With a favourable monsoon season, current pulse production could set new records in India.

This year's monsoon rainfall has been 14% above normal. Heavy monsoon rains have recharged the major reservoirs across the country, which now hold twice as much water as for this time last year. While there is some concern about receiving too much water with consequent flooding, there is good reason to believe that Kharif pulse yields, and the following Rabi (winter) pulse yields will be well above average.

The amount of pulses sown during the Rabi season is likely to rise with enhanced yield potential with recharged soil moisture reserves and replenished reservoirs.

The current forecast is for India to produce at least 18.225 million metric tons (mt) of pulses during the coming 2013-14 season. This will be the third year in the last four that pulse output has exceeded 18 million mt.

Despite pulse production setting a new record in 2012-13 and forecast for strong production in 2013-14, it will not be enough to cover domestic requirements. India currently consumes around 21 million mt of pulses to meet its dietary needs, while population growth is pushing up this requirement by about 280,000 mt per year. The on-going trend is that India needs to import at least three million mt of pulses annually to meet the shortfall from domestic production to demand.

Market situation

The market situation has changed markedly on the Indian subcontinent. While normally needing to import chickpea and field pea, Pakistan has a surplus of chickpea. The over importation of desi chickpeas into Bangladesh coupled with a severe devaluation and then highly volatile Indian Rupee has resulted in contract defaults, in both India and Bangladesh. This has had an impact on not only shipments which had arrived in India and Bangladesh, but also cargo in-transit and grain which had not left the originating port.

Currently, the pulse market is slow with the prospect that this trend will continue well into the Australian harvest period. This may have the effect of keeping pressure on desi chickpea prices, with a flow-on effect for field pea in markets where the two products can be substituted.

Canada The Canadian Yellow pea harvest is forecast to produce a smaller crop than last year but the end stock tonnage is forecast to be higher than 2011 and smaller than 2012.

Canadian exports to China are rising. If demand from India is also strong, then Canadian stocks may be under some pressure later in 2014. However, the Indian Rabi season looks promising for domestic pulse production and this may reduce their import requirements over the next 12 months.

Global lentil stocks, which have suppressed prices for the last 3 years, are finally cleared. Australia exported 350,000 tonnes in 2013 and Canada has exported more than its entire 2012 crop. This left their stocks at about 25% of the stockpile from 2010, with Australia’s stocks essentially empty.

This is the reason that lentil pricing has risen strongly this year and looks to be at a similar level through to harvest.

Markets are forecasting a resurgence in Indian lentil production in the Rabi season after a very good monsoon season provided substantial water storage in most parts of the country.

Harvest of field pea and lentil is well underway in the United States and Canada.

Average yields in Canada will result in a 3.05 million mt crop. If the forecast yields match those reported in 2011, Canada will harvest 3.46 million mt of field pea.


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Canadian Field Pea Supply-Demand Estimates

(metric tons, acres)

Year 2011 2012 2013

Area (ha) 959,341 1,314,961 1,316,929

Production (t) 2,502,000 3,340,800 3,303,900

Carry In 535,000 295,000 174,000

Imports 13,204 19,600 19,800

Stocks 3,050,204 3,655,400 3,497,700

Disappearance

Jul Exports 2,098,859 2,654,718 N/A

Percent of Forecast 100.00% 100.00% N/A

Europe 23,854 117,471 62,000

South America 84,589 66,539 77,000

N/C America 138,571 159,784 140,000

Pacific Rim 1,807,488 2,253,723 2,091,000

Arab/Africa 44,358 57,201 67,000

Export 2,098,859 2,654,718 2,437,000

Seed 235,000 235,000 245,000

Feed & Waste 373,597 554,782 390,700

Domestic 47,748 36,900 75,000

Total Usage 2,755,204 3,481,400 3,147,700

Ending Stock 295,000 174,000 350,000

Stocks/Use 10.70% 5.00% 11.10%

Canadian Lentil Supply-Demand Estimates

(metric tons, acres)

Year 2011 2012 2013

Area (ha) 1,006,998 990,157 937,008

Production 1,573,500 1,537,900 1,573,000

Carry In 827,750 857,976 298,178

Imports 12,076 20,512 20,700

Stocks 2,413,326 2,416,388 1,891,878

Disappearance

2012-13 Exports 1,148,004 1,638,356 N/A

Percent of Forecast 100.00% 100.00% N/A

Europe 45,937 46,774 48,100

Mediterranean 281,193 256,057 287,500

South America 180,886 178,513 178,400

N/C America 77,331 62,945 66,000

Pacific Rim 309,740 811,014 521,300

Arab/Africa 252,918 283,053 271,400

Total Export 1,148,004 1,638,356 1,372,700

Seed 88,100 80,200 79,100

Other Domestic 319,246 399,654 166,718

Total Usage 1,555,351 2,118,210 1,618,518

Ending Stock 857,976 298,178 273,360

Stock/Use 55.20% 14.10% 16.90%

Forecasts by STAT Market Research based on data from Statistics Canada. Source: StatPub September 2013


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China China’s demand for field pea is reported to be on the rise. The primary demand is for the vermicelli noodle market where production has risen from 408,000 tonnes in 2010, to a forecast 630,000 tonnes in 2013/14.

While field pea is not the most important ingredient, it is a significant component. Field pea fractions are also extensively used in snack and health foods.

Field pea imports for the 6 months to June 2013 were 21% higher than last year totalling over 360,000 tonnes. The annual total could reach the 2011 total of 730,000 tonnes. The Chinese market is sensitive to price which could lead to further increase in imports in the short term.

The majority of the field pea imported to China is Canadian Yellow field pea. The Australian ‘dun’ and ‘kaspa’ field pea do not suit this market. Australian White field pea is a suitable product for the China vermicelli noodle market.

China Field Pea Trade Summary (metric tonnes)

Year Canada USA Other Total

2005 236,216 2,250 2,674 241,140

2006 299,024 28,311 2,424 329,759

2007 247,954 12,327 2,543 262,824

2008 194,366 7,108 1,928 203,402

2009 356,456 14,790 1,383 372,629

2010 480,728 70,068 1,757 552,553

2011 696,635 28,529 5,320 730,484

2012 641,009 27,420 8,121 676,550

First half 2012 289,532 6,488 5,594 301,614

First half 2013 n/a n/a n/a 364,255

SOURCE: China Customs


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Europe Western Europe is generally experiencing an above average season. To illustrate this, the table shows the French field pea supply and demand estimates. It shows that yields will be high this season.

With the field pea area down substantially on the 2011/12 season, the export quantity will be 120,000 tonnes less than in 2011/12. The estimate for the domestic feed supplies will also decrease on that shown for 2012/13.

France -- Field Pea Supply-Demand Estimates (hectares, metric tons)

2011-12 2012-13 2013-14

Area (ha) 183,400 134,300 129,000

Yield (kg/ha) 3,616 4,222 4,496

Production (MT) 663,200 567,000 580,000

Imports 12,000 11,000 13,000

Carryin 83,000 50,000 30,000

Stocks 758,200 628,000 623,000

Disappearance

Exports 348,690 198,305 231,000

Seed & Food 59,950 59,300 60,400

Domestic Feed 299,560 340,395 309,600

Total Usage 708,200 598,000 601,000

Ending Stocks 50,000 30,000 22,000

Stocks to Use 7.10% 5.00% 3.70% Source: STAT Market Research based on information from UNIP and France Customs.

Australia Pulse markets

Field pea With the North American harvest underway, pre-harvest prices for field pea are easing.

The field pea crop in Canada is reported to be yielding above average. While this has been anticipated by the market, it has nevertheless caused an easing of prices. Additionally it has been reported that Canadian farmers are selling to generate cash flow. With concerns about the state of the market into India, demand is slow to steady.

Reports from Europe indicate that rapeseed meal is in good supply with demand for feed pulse grains lower as a result. Generally livestock feed supplies are much improved from last year when the Western European drought caused imports of lupins and peas from Australia to rise strongly.

The Australia field pea crop is forecast by Pulse Australia to be 60,000 tonnes larger than 2012 at 380,000 tonnes. All the major field pea producing regions in southern and Western Australia have experienced a very favourable season and will produce high yields. The production forecast could rise as harvest commences.

Australian domestic prices for field pea have steadily risen since November. The currency issues in India that affected chickpea market caused a similar affect in field pea.


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Faba Bean The bullish Faba bean market seen over the past 2 seasons in Australia looks to be continuing. Prices continue at over $400 per tonne, close to the level offered by the trade at harvest last year.

France has been a strong supplier of beans into the Middle East market over many years. Last year’s drought caused a shortfall in supply. With seasonal conditions in 2013 close to ‘normal’, France should again have faba bean supplies for export.

The civil unrest in the Middle East is causing some market concerns but it is not known what impact this will have on the trade in the coming 6 months.

The current Pulse Australia forecast of 325,000 tonnes of faba beans is similar to the production total in 2012.

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Field pea del Melbourne FIS Sept 2012 to Sept 2013

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Faba bean del Melbourne FIS Sept 2012 to Sept 2013

Source: Profarmer

Source: Profarmer


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Chickpea Australian domestic prices for desi chickpea fell from around $600 per tonne at the start of the 2012 harvest to $500. It remained steady at this level after the export of the majority of the 2012/13 crop due to limited supplies and demand. Since July it has fallen further to $400 per tonne for several reasons

The strong demand from India late last year, which resulted in record exports of Australian desi chickpea in November to January, created good levels of domestic stocks.

The Indian monsoon season has been wet, resulting in good supplies of summer pulses ( Pigeon pea and kabuli chickpea). The strong monsoon has delivered good water reserves for irrigating the Rabi (winter ) crop. This has led to bullish forecasts for pulse production in India in the next 8 months. While imports will need to remain at around 3 million tonnes, better domestic supplies will reduce the short term need for imports

The Indian Rupee has been devalued by about 20% and remains weak to both the Australian and US dollar. Its volatility has created confusion and put Indian buyers onto a “risk off” footing with regards to further purchases of chickpeas. This has also caused some contract issues and increased the marketing risk for Australian exporters.

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Desi chickpea del Brisbane FIS Sept 2012 to Sept 2013

Source: Profarmer


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Lupin Demand for Australian Sweet Lupin was steady though 2012/13 with limited stocks from the relatively poor Western Australian harvest last year. Current prices are slightly since August reflecting the sharp fall in soymeal prices.

The return to average seasonal conditions in Europe has increased local feed stock supplies and depressed the need for importing lupins for stock feed.

Australian Albus stocks from the 2010 harvest have been cleared and this should enable the current production forecast of around 40,000 tonnes to match demand.

The principal market for Australian Albus is Egypt. The current civil unrest there, and across the Middle East, coupled with currency concerns may have some effect on markets as harvest approaches.

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Aust Sweet Lupin del Kwinana FIS Sept 2012 to Sept 2013

Source: Profarmer


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Soybean market With export value of Australian Sweet Lupin being closely linked to the soymeal market, it is useful to note the key drivers in soybean production around the world

Key points about the future pricing of soybean and soymeal commodities include

Old stock U.S. soybean supplies are low

There is projected to be a large crop and higher supplies of U.S. soybeans for the 2013/14 season

There is record high South American supplies in old season soybeans

There are expectations of continued strength in Chinese soybean import demand for new seasons grain

Projected World soybean production of 286 million metric tonnes (mmt) new season crop would be a record high, and is up from the previous record of 268 mmt in 2012/13

Projected World soybean use of 271 mmt in 2013/14 is also a record high, and up from the previous record of 259 mmt for 2012/13.

Source: Dan O'Brien, Extension Grain Economist, Kansas State University http://www.agmanager.info/marketing/outlook/newletters/Soybeans.asp

Source Barchart.com, Sept 10 2013

$US / short ton


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Lentil Lentil markets rose strongly through 2013 up to July as carry-over stocks in Australia and Canada were cleared. Australia exported around 240,000 tonnes to the end of July after moving 385,000 tonnes in the 2011/12 marketing year. New seasons lentil values have fallen since July for several reasons.

Lentil production in Australia and Canada is forecast to be at strong levels, 250,000 tonnes and 1.57 million tonnes respectively. The Canadian harvest is currently in full swing and markets are usually subdued in anticipation of new season’s grain.

The Indian Kharif monsoon season delivered substantial water for irrigating the Rabi (winter) crop. While imports will always be needed by India, domestic pulse production is likely to be higher than in recent years.

The currencies of the sub-continent have been under pressure of late, causing defaults on some contracts. This is causing great uncertainty for our marketers into the sub-continent. The fall in pricing since mid-July mirrors that for field pea and chickpea.

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Lentil del Melbourne FIS Sept 2012 to Sept 2013

Source: Profarmer


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Financial News The Australian dollar exchange rate has fallen by 10% against the US dollar since May to be at about 90 US cents. This is welcome news for Australian grain producers after seeing the Australian dollar at over parity for the last two years.

The exchange rate to the UK Pound and Euro has also fallen, by 14% and 12% respectively.

The drop in the Australian dollar value will raise domestic values for grain and may attract some further demand for exports as Australian grain becomes relatively cheaper.

The exchange rate for the Indian Rupee shows a sharp reduction in value to the Australian dollar, depreciating 6% in the last 6 months. This is making Australian grain more expensive for Indian importers. The Japanese Yen has appreciated 8% to the Australian dollar since April.

How the Rupee is Affecting Pulse Markets By Chuck Penner, Leftfield Commodity Research

Courtesy: Saskatchewan Pulse Growers Market Report September 2013

There’s been a lot of buzz in pulse markets lately about the Indian rupee and how it’s affecting trade; and for good reason. After all, it’s common knowledge that India is the largest producer and consumer of pulses on the planet. What happens in India doesn’t stay in India.

From a Canadian perspective, in 2012/13 India imported 53% of the total red lentil exports, 42% of yellow peas, and 21% each of green lentils and green peas. Suffice it to say, any problems with India’s ability to purchase pulses will affect markets in Canada. While it’s true that Indian consumers still need to eat, they can switch away from imported foods to cheaper domestic food grains such as wheat and rice.

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Yen Rupee

Source: RBA

Source: RBA


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Every time the rupee declines, it costs more for Indian buyers to import Canadian pulses. And it has been declining – hard. Between May 1 and early September, the rupee lost 21% against the U.S. dollar and 18% against the Canadian dollar.

At the time of writing, the rupee has bounced back a bit but the underlying factors behind the weaker rupee aren’t expected to be resolved quickly. The growing current account deficit in India, the weaker economy, and the declining rupee are part of a vicious circle and it’s not clear what the Indian government can do to pull out of this spiral. Unless the United States (U.S.) government takes steps to moderate its dollar’s rise against emerging-market currencies, the rupee (like other currencies) will struggle to regain value.

The trade disruptions caused by the weaker rupee have been well documented, particularly the cancelled and rerouted sales. Beyond the immediate hit to the bottom line for affected traders, the currency fluctuations are keeping a cautious chill over the market. This doesn’t mean Indian imports will grind to a halt. For the most part, it was the rapid devaluation that caused the recent trade problems. If the rupee levels off, trade will resume with decent volumes, albeit at lower values.

And there’s no question the rupee has been negative for prices. For example, if the U.S. dollar/rupee exchange rate had stayed the same as it was in early May, imported yellow peas in Mumbai would be US$570/ tonne instead of the US$470 they are at the time of writing.

The situation is the same for red lentils; the “Red Lentil Spot Price” chart (right) shows that prices in the local currency are still hovering around the highs but have dropped sharply when quoted in U.S. dollars. Of course, the flipside could also be argued, that the weaker rupee is causing local prices to remain inflated.

One recent question is whether the weaker rupee is the main reason why bids in Western Canada are sliding hard the past few weeks. The answer is yes – and no. A look at seasonal price charts for peas shows the lows tend to happen at this time of year – no surprise there.

The same thing applies to both red and green lentils. So in many ways, the weakness is simply seasonal.

And this year, the seasonal price pressure is worse than usual. Big crops (not just pulses) are coming off across the prairies, and farmers are looking to move larger-than-usual volumes to avoid tying up bins or piling grain on the ground. Earlier crops such as peas and lentils get pushed on the market first and face even more pressure.

The problem this year is compounded because there is weaker Indian demand, caused by the sliding rupee, at the same time that freshly harvested supplies are hitting the pipeline. Typically, Indian demand (especially for yellow peas) rises at this same time of year and helps offset the surge in new-crop supplies. However that’s not happening as much this year.

Copyright© 2013 Pulse Australia.

All rights reserved.

Disclaimer

There is no intention to provide advice on pricing in this publication. Due to the volatility of pulse prices, growers are encouraged to consult with local marketing businesses to obtain up to date pricing information. Acting on a single piece of information is ill advised. To build a depth of knowledge, growers should reference a range of data sources from around the world and from a variety of marketers within Australia. Always cross reference information to determine its importance and accuracy. The information herein has been obtained from sources considered reliable but its accuracy and completeness cannot be guaranteed. No liability or responsibility is accepted for any errors or for any negligence, omissions in the contents, default or lack of care for any loss or damage whatsoever that may arise from actions based on any material contained in this publication. Readers who act on this information do so at their own risk. Consult your adviser before making crop, marketing or investment decisions.

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