Sept 16: Chickpeas Harvest Slowing (But Still Huge)

The pace of the chickpeas harvest in North America has slowed slightly. However, this year’s crop will still be huge. The question is: who’s going to buy?

Current Sales Position:

We are 100% sold for 2017/18 old crop chickpeas.

We are 15% sold for 2018/19 new crop chickpeas.

Post Your Chickpeas

 

Good morning,

This past week, the mother of all bearish WASDE reports came out from the USDA. Here, I’m explicitly referring to the record corn and soybean yields that the market was not expecting at all, especially for corn who’s average yields came in at 181.3 bushels per acre.

U.S. Chickpeas Harvest Looking Big

For the U.S. chickpea crop, the USDA said that total American production would come off about 651,000 total acres harvested, including 449,000 acres of Kabuli (large) chickpeas) and 202,000 acres of Desi (small) chickpeas. These numbers are all more than double their 5-year averages of 310,600, 216,400, and 94,300 acres respectively.

While there was not explicit yield and corresponding production estimates from the USDA last Wednesday, we estimated the 2018/19 U.S. chickpea crop between 353,200 MT and 416,400 MT, using a yield estimate range between 95% of the 5-year average and the actual 5-year average of 23.3 bushels per acre for kabulis and 24 bushels per acre for Desis.

This is obviously a bit bearish, but we would argue that this size of the crop has been already priced in. More on this later.

Super-Small Australian Chickpeas Crop

While the U.S. chickpea crop is getting bigger, production numbers in Australia are going the opposite direction.

This past week, ABARES lowered their estimate of the chickpeas crop in Australia to a super tiny 351,000 MT. This is almost 43% below their estimate from back in June of 616,000 MT. It’s also 66% lower year-over-year and 65% below the 5-year average of 1.018 MMT.

Australian Chickpeas Production and Acres

However, this is what happens when you have the 15th driest year ever. More specifically, ABARES said, “During winter 2018, rainfall was average to extremely low in cropping regions in Victoria, Queensland and South Australia and below average to well above average in cropping regions in Western Australia.” Specific to New South Wales, ABARES said that rainfall was “severely deficient”.

Australian Rainfall September 2018

Here’s a regional look at the 2018/19 Australian chickpeas harvest, as compared to their 2017/18 numbers:

 – New South Wales: 32,000 MT (-92% year-over-year) off 91% less acres than 2017/18;

 – Queensland: 245,000 MT (-62%) off almost the same decline in acres;

 – Victoria: 30,000 MMT (-50%) off 36 less acres;

 – South Australia: 32,000 MMT (-8.5%) off 20% less acres; and

 – Western Australia: 12,000 MMT (+50%) off strong yields and acres up 33%.

We’ll get the next ABARES report for Australian chickpea production on Tuesday, December 4th, 2018, but it’s clear that there are not a lot of chickpeas to go around in Australia.

Who Covers the Aussie Chickpeas Harvest?

As we mentioned in the entire recap of the WASDE for chickpeas, this year’s North American chickpea harvest could be pretty big.  

More simply, when you combine the American chickpeas harvest with the Canadian chickpeas production number of 294,000 MT estimated by StatsCan 3 weeks ago, this could add up to a total crop of around 900,000 MT. This is nearly triple the 5-year average and clearly bearish.

(Full disclosure: Agriculture Canada is currently estimating the Canadian chickpeas harvest at 335,000 MT so perhaps the total North America number will be even larger).

The bigger question is, can the super-small Aussie chickpeas harvest be covered by someone else? Put another way, who would fill the void left by the smaller Australian chickpeas harvest?

The clear answer is Canada or the United States.

What’s wild is that just 2 years ago, Australia produced over 2 MMT of chickpeas. That same year, Canada and the U.S. only had a chickpeas harvest of 82,200 MT and 267,700 MT respectively.

That’s ridiculous!

But when you consider that Australia was accounting for literally 90% of India’s chickpea imports, it makes sense.

But when your go-to market suddenly puts the cuffs on the market, you see a drastic reduction, namely in Australia.

Canadian, US, and Australian Chickpea Production

Despite the Canadian chickpeas harvest nearly matching Australia’s, total production of 1.102 MMT between these two and the U.S. is still down 25% year-over. It’s also 19% below the 5-year average of 1.362 MMT.

The United States has usually accounted for more chickpea exports to India in the past, but it’s hard for them not to notice the much larger supply in Canada this year.

That being said, North America is clearly going to be the most viable option when it comes to international purchasing in 2018/19.

Actual Chickpeas Harvest Progress

In the US, the chickpeas harvest is virtually complete and so most of the focus is being placed in Western Canada.

Saskatchewan, the chickpeas harvest in the province is 62% complete, well behind last year’s 83% of field’s combined by this week in September. The cooler, wet weather seen recently is certainly putting a negative impact on field activities.

That being said, our recommendation is to know what you have in the bin. This means getting your chickpeas tested ASAP, via GrainTests.com or your regular means. Even if you have chickpeas left in the field, I strongly recommend ordering your tests so you can send you samples off the field immediately into the lab.

Sit and Wait?

Looking internationally, we got some bad news from Turkey again this week as the central bank there increased interested by 6.25%. As an economist and one who has learned from some of the best economic historians in the world, first at Yale and then working on Wall Street, Turkey’s move to raise interest rates by this amount is absurd given their currency crisis and high inflation already in place, as mentioned a few weeks ago.

Put another way, Turkey’s move will likely put a bit more negative pressure on chickpeas prices, especially considering their purchasing power has been lowered by 40% in the past year (that’s how much the Turkish lira has lost against the Canadian Loonie in the past year). For the US Dollar, the Turkish Lira has lost 44% since this time a year ago.

In India, adequate stocks are meeting sporadic demand. The demand is sporadic because the market is looking to the upcoming kharif (summer) harvest for fresh supplies.

Overall, we continue to work through the usual harvest pressure and are looking for better values to start appearing towards the end of the month and then into early October. The situation in Turkey may put some pressure on this but it may be offset by planting/production concerns of India’s planting of the rabi (winter) crop.

On a positive note, we saw a few bids on the FarmLead Marketplace this week for 25¢ CAD/lbs in Saskatchewan and 26¢ in Alberta.

Comparably, garbanzos are being bid in Montana and North Dakota around 20¢ CAD/lbs, or basically the same price seen in Alberta.

Ultimately, the plethora of production reports we’ve gotten lately has been generally bearish, save for Australia. The market has already priced in all but the Australian harvest, which may suggest stronger values ahead.

Very concretely, with Australia’s harvest so much smaller, we might end up seeing a healthy game of musical chairs as international buyers shift interest to North America.

To growth,

Brennan Turner
President | CEO

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306-715-4540 (cell)

b.turner@farmlead.com

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FarmLead – North America’s Grain Marketplace

GrainCents

 

 

Sept. 12 – September 2018 WASDE: U.S. Chickpea Acres, Production Jump

Sept. 9 – Smaller Aussie Chickpeas Crop to Create New Opportunity? – Chickpeas Weekly GrainCents Digest

Sept. 2 – Big (But Smaller) Canadian Chickpeas Crop? – Chickpeas Weekly GrainCents Digest

August 31 – 264,000 MT of 2018 Canadian Chickpeas Production

August 26 – Chickpeas Harvest Moving Along – Chickpeas Weekly GrainCents Digest

August 19– Chickpeas Prices Rebounding? – Chickpeas Weekly GrainCents Digest

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.