FarmLead’s 2018 Chickpea Prices, Market Review

As we turn the calendar on 2018 chickpea prices and markets, it’s a time of reflection, but also one of planning. That being said, as a company, FarmLead is also reflecting on 2018 and planning for 2019 with some new products and tools! We’d love for you to have some input in the evolution of FarmLead (including some early access to try out some new tools) and so, before continuing your reading, please answer this 4-question survey. Thanks!

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FarmLead’s 2018 Recap of Chickpea Prices, Markets

The 2018 calendar year saw chickpea prices start off very weak as the market was still trying to digest the impact of India implementing tariff import duties on all pulses coming into the country. While the impact to all major pulses – chickpea, lentils, and field peas – was felt immediately, chickpea prices continued to be battered throughout 2018.

Technically, the first wave of import tariffs came into effect in November 2017, but the market took a few months before finding new lows. Even then, sporadic trade policy from the India government continued to weigh on chickpea prices, notably the continued increase in import tariffs, most recently as of this past November!

Ultimately, as we neared the end of 2018, and with the North American harvest out of the way, the market started to find to find the lows for chickpea prices. Further, values have started to improve on the news of a smaller crop in Australia and some poor moisture conditions in India. Thus, there’s a bit of a bullish buzz for chickpea prices as as we flip the calendar from 2018 into 2019.

Chickpea Prices Limited by Bigger India Harvest

The biggest factor in chickpea prices in 2018 was without a doubt, India, and it was certainly negative. [1].

Following the largest and second-largest harvest of pulses ever in India of 25.23 MMT in 2017/18 and 23.13 MMT in 2016/17, the government implemented the market-changing import tariffs on all pulses as domestic prices started to fall. Even as 2018 calendar year progressed, Indian prices of pulses have continued to falter, despite the Modi government has continued to drive the message home that they will support Indian farmers through the election in 2Q2019. [2] One problem we foresee is that this sort of protectionist policy could continue into 2019 as the government is currently targeting 24 MMT of pulses to be harvested in 2018/19.

As we flip the page to the 2018/19 crop year, the most recent estimate of the 2018/19 kharif crop of pulses in India was for 9.22 million metric tonnes (MMT). This is just above last year’s kharif crop of 8.9 million tonnes (as per the final estimate from the Indian government), but it is 29% more than the 5-year average of 7.15 MMT. This includes the record kharif crop harvest of 2016/17 of 9.53 MMT.

Something to consider is the current rabi crop that’s in the ground right now in India. It won’t be harvested for a few months but the crop is already dealing with less moisture than usual. As such, it’s our feeling that nearly the only thing that matters for chickpea prices is the Indian rabi crop.

Specifically, the last week crop report of the calendar year says that an average of only 2.8 inches of rain has fallen across the country so far in the rabi crop growing season which started on October 1st. This is 43% below the average of nearly 5 inches of rain that supposed to fall over the 3-month period. If we look even further back to the monsoon period between June and September, total rainfall was 8% below the long-term average.

In major pulses production regions of Uttar and Madhya Pradesh, precipitation levels are about 80-90% below the seasonal averages. We should keep in mind though that reservoir levels in these areas are slightly above average this year, which would be slightly positive for crop production.

On that note, through the end of December, 34.76 million acres of all pulses have been seeded in India. This would be about 9.5% below last year’s acreage of 37.11 million acres by this time in the growing season. For perspective, the 2018 acreage of pulses in India planted thus far is about 3.5% larger than the 5-year average of 33.6 million acres planted by the end of December.

Specific to chickpeas, or chana, as they’re known India, acres planted so far in this rabi crop season has totaled 22.64 million acres. This is about 10.5% less than the 25.34 million acres planted by the same time last year but is about 3% more than the nearly 23 million acres of chickpeas usually planted by the end of December (5-year average).

On that note, chickpea prices are finding some strength on these acreage and moisture reports, albeit have leveled out more recently.

India Chickpea Prices 2018 Performance

Puny Crop in Australia Helps Chickpea Prices

As previously mentioned, the 2017/18 was a record crop of pulses in India. The opposite happened in Australia in 2018/19.

Chickpea production in the Land Down Undaa were negatively impacted by the drier growing conditions there in 2018. This was exacerbated by the fact that Australian producers reconciled with poor chickpea prices by planting less chickpeas. Total production came in at just 330,000 MT, down 68% year-over-year. This was almost half of what the original estimate for the Australian chickpea harvest was back in June!

Dec 2018 ABARES Australian Chickpea Harvest

Chickpea Prices Drop in North America on Big Crops

In the U.S., a drought challenged chickpea yields in 2017, but U.S. chickpea production rebounded in 2018 as both acres and yields improved significantly. We estimate that, with slightly-below-average chickpea yields of 22.5 bushels per acre, this would produce an American chickpeas harvest of 353,600 MT, up 19% year-over-year. This includes 112,200 MT of desi and 241,400 MT of kabuli chickpeas.

2018 U.S. Chickpea Production vs Yields

Unlike in Australia where acres dropped significantly, harvested chickpea acres in the U.S. topped 651,000 acres, double their five-year average. This included 449,000 acres of kabulis and 202,000 acres of desis.

The big crop in the U.S was easily outshone by the increase in the size of the 2018 Canadian chickpea harvest. With 435,000 acres of Canadian chickpeas harvested in 2018, this would be up about 2.5 times more than the 2017 chickpeas harvest and more than double the 5-year average!

Combined with chickpea yields up 19% year-over-year to 26.3 bushels per acre, the Canadian chickpea harvest has been estimated by StatsCan at 311,000 MT. This more than triple last year’s harvest and double the five-year average.

2018 Canadian Chickpea Production and Yields - StatsCan

From a balance sheet standpoint, there wasn’t a lot of chickpeas left at the end of the 2017/18 crop year. However, the size of the 2018 chickpeas harvest easily offset the limited carryout and obviously negatively impacted chickpea prices.

AAFC Estimates of Canadian Chickpea Prices & Ending Stocks

While domestic use is expected to pick up, the limited global markets also are limiting the Canadian chickpea harvest.

AAFC Estimates of Canadian Chickpeas Market (Production & Exports)

There’s also some buzz that there’s going to be more domestic demand as consumers are changing their eating habits, but in all honesty, this demand is quite small relative to the size of the Indian market. [3]

Chickpea Prices Finding Year-End Highs

On that note, looking at today’s chickpea prices, values in Western Canada have started to rebound a bit. This is mainly attributed to the speculation of the slightly drier conditions in India as well as some seasonality in terms of international buying. All things considered, it’s nice to see that as 2018 comes to a close, chickpea prices have started to find some strength.

Saskatchewan Kabuli Chickpea Prices - 2018 Performance

Saskatchewan Desi Chickpea Prices - 2018 Performance

As we head into 2019 though, there is clearly still a lot of chickpeas left in North America. However, this likely could be considered contrarian indicator as it might force less chickpea acres in 2019. We’ll dig more into that in our 2019 peas outlook found on our FarmLead Insights page.

To growth,

Brennan Turner
CEO
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FarmLead – North America’s Grain Marketplace

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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