HARVEST of another bumper Australian winter pulse crop is well under way, and is meeting solid demand despite ongoing issues with containerised freight.
In its periodic Pulse Guidance Notes issued to members earlier this month, Pulse Australia (PA) said Australian export prospects were strong, in part because of Canada’s drought-reduced supply.
The PA report said difficulties in securing affordable and reliable container freight, to India and its neighbours, has seen more than 1 million tonnes (Mt) of pulses shipped as bulk commodities from the 2020 harvest.
“This is expected to continue for the 2021 crop, despite bulk freight rates in October 2021 peaking at the highest for 13 years before dropping back,” the report stated.
“Despite a strong harvest locally, getting product to export customers in the current environment is expensive, difficult, and risky.”
The PA report said pulses continued to grow as a proportion of the Australian total winter-cropping area.
“Australia is well-placed to gain market share given the reduction in supply from drought-ravaged Canada.
“Clearly there are substantial challenges in the container trade that will not be resolved quickly, although these are not unique to Australia, and add substantial cost pressure into the mix for importing countries.”
Eyes on India
Late arrival of the monsoon delayed sowing of kharif (summer) pulse crops in some areas, while the slower retreat of the monsoon led to prolonged heavy rain resulting in flooding.
Considerable damage was caused in some areas to soybean, cotton and pulse crops and quality downgrades are being reported in harvested product.
The kharif harvest now is in its early stages and India’s First Advance Estimates from its Ministry of Agriculture and Farmers Welfare, released on September 21, put the kharif pulse crop at 9.45Mt.
Other estimates at the time were 1Mt less, and some now suggest they will be even lower due to rain damage.
Kharif pulses, notably moong (mungbeans) and pigeon pea, are typically around one third of India’s annual production.
How much the rain damages the kharif crop versus promoting more production in the subsequent rabi crop will be important in assessing India’s likely import demand.
Rabi season sowing has begun, and some reports suggest oilseeds are popular, taking area from cereals and pulses.
Within the pulse sector, lentils look attractive for farmers as they have traded above the Minimum Support Price (MSP) for some time, while chickpeas are below MSP.
India in July dropped its tariff on lentils from 30pc to 10pc to boost supplies in a bid to stem price inflation on lentils.
“The duration of this tariff reduction is unknown, creating a risk aversion amongst Australian exporters to commit to forward selling new-crop lentils.”
“However, the tariff reduction has had the desired effect, with substantial shipments from Canada and Australia reaching India in recent months.”
Earlier this month, Indian buyers were seen as reluctant to commit to forward buying because they were aware of the big Australian crop being close to harvest.
“They are also impacted by government restrictions on stock that can be held in various sectors of the pulse supply chain, so are avoiding stockpiling.
“The same container/bulk issue applies to lentils as for other pulses, so competition to export will likely be greatest from those with a strong bulk pathway.”
Along with Bangladesh, Egypt and Sri Lanka, India is seen as a volume buyer of Australian new-crop lentils.
India is not buying Australian chickpeas at present, with a tariff of around 60pc still in place, and it also has a zero import quota on field peas.
Table 1 is a snapshot of currently available production estimates for Australian major pulses with harvest underway. The column on the left is 10-year ABARES average. The ABARES 2021-22 data will update when a revised Australian Crop Report is published next week. Mild conditions generally, including heavy rain in eastern Australia, have delayed ripening and upset harvest.
|ABARES 10-year average||ABARES 2021-22||PA 2021-22|
Table 1: Production figures in tonnes for ABARES 10-year average to 2020, ABARES 2021-22 estimate released in its September Australian Crop Report, and PA November estimate released earlier this month.
Fabas lean on bulk
Volume exported from the 2020 faba bean harvest suggests the crop was larger than indicated, and ships were still loading in October ahead of another big crop.
Traders have reported prices as being slightly above feed value, but they could drift to parity as supply-side pressure increases.
“Given last year’s carryover, shipping is driving this market and the container issue is highly relevant for beans, the impact will be dependent upon location.
In Queensland and northern NSW, traders report containers are in short supply, and no path to bulk export exists because shipping slots are fully booked.
“This means limited export scope and prices driven locally, which may encourage growers to hold stocks.”
Portland in Victoria and South Australian ports have been exporting bulk beans from last year’s harvest, and because Egypt buys around 70pc of Australia’s bean exports, SA growers positioned to supply cargoes appear to be better placed than growers in eastern states.
Pakistan buys big on chickpeas
Chickpeas are feeling the impact of limited container availability as Pakistan, Australia’s major chickpea market for the 2020 crop, is believed to have bought only one bulk cargo, with the rest arriving in containers.
“Pakistan came to the rescue for around 370,000t.”
Bangladesh is expected to continue as a bulk buyer of Australian chickpeas, and demand from Pakistan is seen in the container market.
“Growers with no easy access to bulk, and who don’t have sufficient storage, may face some challenges.”
Lupins, peas mixed
Soybean meal prices are an indicator for Australian lupins, with soybean prices driven by demand by China.
“Import demand from China for soybeans has softened recently and US soymeal prices have fallen from their January peak, so this can be expected to impact lupin prices into the key markets of the Netherlands and South Korea.”
On field peas, Canada drought-reduced crop has transferred some global demand to Australia.
“Scope for Australian peas to fill export demand has been much stronger.
“As one example, Malaysia bought its largest tonnage from Australia in 10 years, 26,000t since September 2020.”
This bulk field pea export demand, along with purchases of Australian peas by China, seems likely to continue.
Source: Pulse Australia