Current Sales Position:
We are sold out (100% sold) for 2017/18 old crop chickpeas.
We are 15% sold for 2018/19 new crop chickpeas.
This week, we start in Turkey, where, their currency, the Lira, collapsed to a record low against the U.S. Dollar, thanks to ongoing trade and political turmoil between the U.S. and Turkey.
On one hand, the U.S. administration has imposed tariffs on steel imports from Turkey. On the other hand, Turkey is very adamant that the U.S. is hosting some political adversaries of President Erdogan.
Also, Turkish credibility on the financial markets is weakening as the current president wants to exert control over the economy. The bottom line is that the Turkish currency had a free fall this week and is now down 20% month-over-month to roughly 17¢ USD.
Developments on the Turkish currency front had a ripple effect hitting other countries such as India where the Rupee lost ground against the U.S. Dollar this week as well. We need to point out that, in India’s case, this has to do more with increasing inflation over the past couple of months. At the time of this writing, the Indian Rupee is worth roughly 0.014 ¢ USD, which is down 7% year-over, as shown on the chart above.
How is this relevant to chickpeas?
Well, the weakening of the Turkish and Indian currencies is really a double-edged sword.
A weaker currency is going to make these two countries’ exports more competitive on the international markets. However, the purchasing power of the Turkish and Indian importers has been severely compromised. While Turkey and India aren’t necessarily HUGE buyers of North American chickpeas, the currency is a bearish factor as they do help set the world price. With less purchasing power though, that world price is now under the gun.
Chickpeas Seeing Harvest Pressure
The currency developments in mind, we’re seeing some of the usual harvest pressure on chickpeas this week. This is normal though and had previously mentioned this in our mid-year outlook that most crops, including chickpeas, experience seasonal lows between late August and October.
Prices to start to pick up, though, in November and December once the harvest campaign is complete.
Chickpeas Prices in Australia Pop
In Australia, 2018/19 chickpea supplies are expected to be fairly tight. Therefore, chickpeas prices in the “Land Down Under” have been picking up significantly as of late, now sitting at are $765 CAD per MT or $585 USD per MT (or 35¢ CAD or 27¢ USD per pound).
Australian traders are raising their bids as they need to compete for depleted supplies ahead of what is looking like a depressed 2018/19 harvest, thanks to smaller acres and drought conditions. As a reminder, ABARES has recently pegged Australia’s chickpeas at 616,000 MT, a drop of 40% year-over-year, thanks to acres dropping 53% from 2017 to just 1.3 million.
We think that the harvest could be even smaller though, given the drought conditions in Australia, especially in New South Wales and Queensland. This is significant since these two southeastern states account for 89% of all chickpea acres in the Land Down Undaa.
The drought situation in Australia is something we touched on in last Wednesday’s FarmLead Breakfast Brief, including this map showing significant precipitation deficiencies.
India Also Missing Rain
Through August 16th, the Indian Meteorological Department (IMD) pegged cumulative monsoon rains at an average of almost 21 inches for the whole country, which is 9% behind the average.
This is an improvement though 1% from last week when we saw cumulative rains in the country at 10% behind the average. Over the next 2 weeks, the IMD expects rainfall activity to be normal to above-normal over most parts of the country except parts of northern India
According to the Indian Ag Ministry, the seeding of the pulse crops in the Kharif season was completed as of this week.
Canadian Prairies Continue to Bake
Under high temperatures and trace amounts of precipitation, topsoil moisture conditions “have significantly worsened”, according to Saskatchewan Agriculture.
A quarter of the fields are considered to have their topsoil moisture now rated very short. With this conditions in mind, crops have either finished out and/or dried down rapidly and thus, yield and quality may be affected.
Only a few fields of chickpeas have been harvested, but heading into this week, week, the seasonal average for harvest progress is 5%.
The latest heat wave seen this past week is certainly a threat to yields as crop finish up. If accurate, we might see Canadian new crop chickpeas harvest edging lower from Agriculture Canada’s current forecast of 335,000 MT.
Clearly, this is bullish, but it’s unlikely that StatsCan’s August 31st production report will reflect these recent changes since the survey is compiled from all the way back in July.
To the south, the USDA reported that 8% of Montana’s dry beans crop (including chickpeas) has been combined. This is an advancement of 3 points week-over-week but way behind last year’s pace of 65% harvested and the seasonal average of 35% harvested.
Going into tomorrow’s USDA Crop Progress report, the five-year average for Montana’s dry beans/chickpeas harvest progress is 52%.
Higher or Lower Chickpeas Prices
To sum up, we’re are starting to see some harvest pressures on chickpeas prices, but those have been exacerbated by the currency issues in India and Turkey.
However, on the bullish side, hot/dry weather in both Canada and Australia could easily reduce the size of available supplies for international buyers to purchase from. That being said, improved demand prospects for chickpeas in India could give the chickpeas market a new price direction
Finally, the progress of the chickpeas harvest in North America is obviously an import factor to watch going forward.
Have a great week!
– Brennan, Garrett, Adrian, and Victor
August 13– Chickpeas Weekly GrainCents Digest
August 5– Chickpeas Weekly GrainCents Digest
July 29– Chickpeas Weekly GrainCents Digest
July 22– Chickpeas Weekly GrainCents Digest