Over the past couple of months, we’ve been reporting on how India is scrambling to deal with the local pulse production glut. Back in April, we explicitly summarized the main developments on the Indian front as related to lentils.
More recently, GrainCents reported that India was going to implement an import quota licensing system that would allow only 100,000 tonnes of yellow and green peas imports. Perhaps India could implement a similar quota system on lentils but it’s unlikely at this time.
Today, we thought we would cover one analyst’s view with respect to the pulse market in India.
On the supply side of the Indian pulse balance sheet, the analyst forecasts that Indian pulse acres in the upcoming 2018 kharif season will decline by anywhere between 2.9 to 3.7 million acres. Thus, this means lower production! The Indian government is recognizing this as the Ministry of Agriculture says that total pulse crop output from this year’s kharif season will drop by 600,000 tonnes, or about 6% year-over-year, to 9 million tonnes.
However, the analyst says that this target won’t be reached, despite even the assumption of normal weather conditions. In his view, the output is poised to fall closer to the 8 million-tonne mark, as shown on the chart. He stressed that progress of monsoons, as well as planting in the coming months, are two important factors to watch going forward.
A few weeks ago, the Indian Ministry of Agriculture was the estimating the country’s 2017/18 lentils harvest at 1.5 million tonnes. This is up about 24% year-over, or by 290,000 tonnes, and is a new record.
On the demand side, there is a rebound expected in India over the next few months. Local celebrations such as the Ramadan, occurring from mid-May through mid-June, followed by a series of Hindu festivals from August to October, are expected to enhance the consumption of pulses. Thus, heading towards September, pulse supplies are likely to tighten up. A couple of weeks ago, we reported that over the past three marketing years, India imported, on average, 956,000 tonnes of lentils per year. The point to understand here is that the production spike of 290,000 tonnes this year will cover domestic consumption needs for the next couple of months.
At the time of this writing, we find that Indian red lentils prices are stabilizing.
Ultimately, even though India is seeing an early start to the monsoon season, the lower production and high demand expectations are a bit bullish.