WITH the recent surge in pulse prices, the most common question we hear is - what will the price be at harvest
This is a difficult question to answer, but we can at least throw some light on the reasons for the prices and perhaps what may happen.
Let's look at what crops we are talking about:
Lentils
The largest producers of lentils in the world are Canada, India, Turkey and Australia. India and Turkey usually consume all they produce and import any shortfall to meet demand. India relies on good monsoon rains in June to August to give suitable subsoil moisture for seeding in October-November. Harvest in India is in March and April.
Peas
The Middle East and India rely on chickpeas as one of the mainstays of their diet. Local production cannot fill demand, so imports are required. If imported product becomes price-prohibitive, field peas are used as a substitute at a lower price. The major exporters to supply this market are Canada and Australia.
Beans
As with lentils and peas, Australia's beans are exported, mainly to the Middle East. Egypt is a major buyer, with the volume they import proportional to the level of their local production and that of neighbouring countries. The first ports-of-call for Egyptian imports are France and England. Once supplies from these countries are exhausted, Australia gets its chance at exporting beans to Egypt.
As we can see, the price of pulses in the Australian market depends largely on import demands from the Middle East and India. If, as we have seen lately, any of these areas have a production issue, imports are required to make up for the shortfall.
Australia's largest competitor in the pulse export market is Canada. If Canada has a bumper crop, prices are generally subdued, even with demand from the Middle East or India, as Canada can usually fill the shortfall. But if Canada's production struggles and the crops on the subcontinent are below average, then the price perfect-storm looms.
This is what we are seeing with the price spike for pulses on our domestic price boards.
The Indian 2014 and 2015 lentil and chickpea harvests were poor ones, due to drought conditions at seeding one year and storms at harvest the next. This meant India needed to significantly increase its imports to meet demand.
Canada has filled what it can, while Australia makes up the remainder.
Early estimates have put India's requirement for imports of lentils for 2015-16 at 600,000 tonnes-700,000t, remembering that their harvest will not be until March 2016. Canadian crop estimates are, at best, average this year because of the dry that has hit much of the country. Peas are suffering the same fate, reducing Canada's ability to fill the gap in India's chickpea production.
Turkey is generally a net importer of lentils but the production shortfall is significantly less than that of India. In fact in some years, Turkish production does match demand. Turkey has almost completed its lentil harvest for this year, with estimates well above last year's crop, and Canadian imports are expected to drop from 300,000t to only 150,000t to cover the shortfall.
So what can we expect from here? All eyes will be on Canada as it approaches its pulse harvest in August. If, as expected, Canadian yields are below expectations, then we can expect pulse prices in Australia to remain at levels similar to preset prices. but should the Canadian crop surprise us, prices will most likely recede, but to what extent is unclear at this time.
We would expect our harvest price for lentils to at least remain above $700/t should everything go as expected.
The usual harvest pressure on prices will come once the Canadian crop starts to fill the bins and sales start to take place. Prices are somewhat misleading because there are no sales at present and growers are not willing to risk forward sales of pulses.
