2017 Garbanzos / Chickpeas Market in Review

When we started 2017, chickpeas prices were still doing pretty good, but there were some bearish challenges from healthy 2016 monsoon rains in India.

The great Kharif/summer crop was setting up things for a record Rabi/winter pulse crop scenario.

As such, going into 2017, values for new crop 2017/18 chickpeas (or garbanzos as they’re commonly known) was still sitting around 55 cents CAD/pound.

This was well down from the sales some farmers made successfully on the FarmLead Marketplace in the 60s and 70s cents per pound range in 2016. Even 2016/17 were being made in the 60s range, so why contract new crop acres for anything less than that, right?!

Thus, there was skepticism held by many a farmer that they should be contracting a lot of new crop chickpeas, considering where they were making sales on old crop.

There was still some optimism for better chickpeas prices going into the 2017/18, growing season, albeit not as much as 2016/17.

Thus, we had correctly forecasted at the beginning of 2017 that chickpeas markets going forward would be dictated by what was going on in Australia and India.

We also successfully recommended at that time to be up to 50% forwarded contracted on your lentil acres before any planters rolled.

I guess you could argue that this number turned out to be low but 40% is the maximum we could get an Act of God clause on and with record new-crop values available, putting 10% of potential production on the line was okay from a production vs. sales risk management standpoint.

Chickpeas Acres Chase Record Prices in 2017

That being said, 2017/18 Canadian chickpeas acres increased 11% from 2016/17. This meant that 168,300 Canadian acres got planted in 2017/18 with chickpeas, compared to just 152,000 the spring before.

This, however, was right in line with the five-year average of 169,200 chickpeas acres planted in Canada.

In the US though, garbanzo acreage continued its torrid expansion in 2017.

American farmers seeded about 462,000 acres of chickpeas, which would be a 42% increase from the 325,300 acres planted in 2016/17.

For a further perspective of the expansion, just 206,500 acres of chickpeas were planted by American farmers 2 years earlier in 2015/16.

The expansion is mainly due to the increase of domestic demand for chickpeas across the United States. We spoke extensively about this in November, as chickpeas aren’t synonymous with just hummus anymore.

From a production standpoint, it’s estimated that the 2017 US garbanzos harvest would reach 371,000 tonnes. Compared to the year prior, that would be a 50% increase. Since the majority of the US chickpeas harvest takes place in the Pacific Northwest states of Washington, Idaho, and Montana, not too many acres were impacted by the dry growing conditions this past year.

Comparably, the Canadian Farm ministry says that chickpeas output in the Great White North would be 12% higher compared to the previous year at 92,100 tonnes. This number could’ve been way higher if it had not been for some drier growing conditions and corresponding below-average yields.

More specifically, Statistics Canada says that average 2017/18 Canadian chickpea yields were just 19.7 bushels per. Comparably, last year’s average chickpeas yield in Canada was 27.6. The five-year average is nearly 30 bushels per acre.

As we mentioned in a pulse outlook at the end of October 2017, there continues to be some optimism for chickpeas prices as we flip over the calendar into 2018. Similar to this time a year ago, we’ve seen chickpeas prices rally up, with some trades above 70 cents CAD/pound being seen on the FarmLead Marketplace.

Selling at these levels is a no-brainer in our opinion, especially as we continue to see stronger prospects in India for the second straight year.

The one bullish production lentils factor was in the southern hemisphere. Drier conditions in Australia has felled production in the Land Down Undaa by half. Granted, last year was a bumper/record crop for most cereals, pulses, and oilseeds in Australia, 2017/18 production is still below their five-year averages.

No headline in the chickpeas/garbanzos market though compared to the ones the Indian government generated.

India’s Government Policies Bomb Pulse Markets

At the end of September, India’s fumigation exemption for Canadian pulses getting exported there was not renewed. It was suggested that this could add $15 CAD/metric tonne to the cost of trade and effectively push Canadian pulses out of the market (at least for most crops).

The same exemption lost by Canada is expected to expire for US and French exporters on December 31st.

Fast forward about 6 weeks into early November and the India government decided to implement a 50% import tax on yellow peas.  Since yellow peas are a readily available and cheap substitute for chickpeas, we’ve been talking extensively about the impact of this peas tax on chickpeas prices.

Then, about 5 weeks later in mid-December, the Indian government announced a 30% import tax on chickpeas.

As we’ve mentioned the effect of India’s peas import tax on Canadian peas exports, the chickpeas tax hurts Canadian and American chickpeas farmers a bit less.

In 2016/17, India imported 1.08 million tonnes of chickpeas. 85% of those came from Australia. Russia accounted for about 5%, the United States owned 1.4%, and Canada supplied less than 1%.

The reason for the chickpeas import tax is much like peas and the corresponding lentils import tax: the Indian government is trying to support the increase of production of pulses domestically, instead of having to rely on imports.

And the numbers don’t lie.

It’s expected that this year’s Indian Rabi/winter chickpeas crop – or chana, as they’re called in India – will top 25.7 million acres! From that, based on average yields, production should hit a record of 9.5 million tonnes.

2018 Chickpeas Prices, Market Expectations

With more information flying at farmers than ever, it’s difficult to get all of your insight in one place to help you make actionable decisions on your grain. That’s why FarmLead introduced GrainCents, a subscription service dedicated to telling farmers when to sell or hold their chickpeas.

In addition, we provide regular price analysis and a deep-dive into the major (and minor) factors impacting your crop every day. In GrainCents right now, there are 6 different factors that we have identified as either bullish or bearish for chickpeas prices.

With this insight, we help you identify windows to get the best price possible for your crop.

We also identify in GrainCents what percentage you should be sold on your 2017/18 old crop chickpeas, as well as where your sales should be on your 2018/19 chickpeas crop.

And next week, we’re giving our GrainCents chickpeas subscribers a special report that is worth more than an annual subscription to the service on its own.

We’re unveiling our 2018 chickpeas market outlook exclusively to our GrainCents readers.

Inside this report, we’re going to discuss the critical factors that will affect your chickpeas or garbanzos crop in 2018. More importantly, we’re going to begin to set our schedule for potential selling opportunities so that we can capture the best price possible in the year ahead.

Go here to access the 2018 chickpeas forecast.

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.

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