Markets

Pulse Update: Lentils strong, others soften

Liz Wells, February 21, 2022

ADM loads a cargo of South Australian lentils, a first for the mobile shiploader which has been in operation since ??? at Cargill’s facility in Port Adelaide. Photo: ADM Australia

 

INDIA’S axing of its tariff on Australian lentils, coupled with a strong bulk-shipment program, have seen prices for lentils firm in the past month.

However, faba bean and mungbean bids have softened, and the chickpea market remains in the doldrums as exporters see limited demand for rain-affected product.

On Wednesday, the Global Pulse Confederation hosted a roundtable on the market outlook for Australian pulses.

Introducing the session, Pulse Australia chair Georgie Aley said Australia’s 2021-22 (Oct-Sep) pulse crop was most recently estimated at around 3.2 million tonnes (Mt), 26 per cent above the five-year average.

“Given strong yields we’ve seen, we’re pretty confident we’ll exceed that 3.2Mt.”

The PA estimate includes field peas, lupins and minor pulses, and a greater-than-normal proportion of chickpeas, faba beans, field peas, lentils and lupins are being exported in bulk because containers going anywhere other than North and South-east Asia are problematic.

“While we’re seeing record shipments in bulk…containers remain a real issue.”

Ms Aley said planting of the 2022-23 crop will get under way in April, and in favourable conditions.

“Growing regions enter with a near-full soil moisture profile.

“This is quite unusual …but it’s a really great position to be in.”

The roundtable included presentations from Agri-Oz Exports managing director François Darcas, Australian Grain Export pulse trader Will Alexander on lentils, and Wilson International Trade principal Peter Wilson on chickpeas.

Extracts from these speakers are included below, and all prices quoted are in Australian dollars per tonne unless otherwise stated.

Chickpeas

Spot demand for Australian chickpeas remains thin outside accumulation for already-booked bulk cargoes out of Queensland.

Some containerised demand exists for chickpeas for processing into chana dahl, but the ongoing container shortage and prohibitively expensive freight rates are limiting sales.

Bids from Darling Downs container packers are sitting at around $500-$520/t, the lowest in years.

It reflects the fact a large portion of the bright and high-quality chickpeas harvested prior to successive rain events has been shipped or bought already, and growers and trade selling interest is minimal at current levels.

“Some of the big traders are trying to get out of their positions, and growers are holding out for much higher prices,” one trader said.

Mr Wilson said Bangladesh has been seeking “large, bright chickpeas” in volume.

However, the container market of Pakistan, which imported around 400,000t of Australia’s chickpeas in 2020-21, is not expected to be in the market for anything like that volume in 2021-22, largely because of its own improved crop.

Mr Wilson said what Australia needed was milling customers in destinations beyond South Asia to process rain-affected chickpeas by dehulling and splitting them for chana dahl.

Despite some crops being abandoned to due rain, Australia is believed to have produced about 1Mt of chickpeas from the harvest just gone, and yields were unusually high at 2-3t per hectare.

Trade sources have said a good portion of mostly rain-affected product remains unsold.

Mr Wilson said growers are baulking at urea prices —more than double where they were last year — and would like to plant a big chickpea area this year for agronomic reasons.

However, they are aware that price prospects are not encouraging.

“If we see more than 600,000ha of desis starting to go in in mid-May, the question is: Where is (the crop) going to go?”

Mr Wilson said growers understood India was likely to stay out of the market, and while demand from Bangladesh is “very stable”, it was not big enough to absorb the bulk of a big Australian crop.

“If Pakistan is not there and India is not there…there’s nowhere else to go for desis, and they don’t have quite the same attraction in the compound feed sector…as faba beans.”

Faba beans

Export demand for faba beans has gone quiet in recent weeks, with feedmills in the greater Melbourne region offering the best bids at around $460/t delivered.

The price is roughly on par with the delivered-port export bids seen in mid-January.

Mr Darcas said Australian faba beans were overall meeting solid demand, even after bumper back-to-back crops.

“Last year, I think we had the largest faba bean crop ever in Australia, a little bit above 800,000t.”

“This year, it’s another large crop, a little bit above 800,000t.”

This is above ABARES most recent estimate of 519,000t, and based on mostly excellent yields in later cropping areas.

Export data indicates 568,000t was shipped in 2020-21 (Oct-Sep), which well exceeds the previous record of 461,000t shipped in 2016-17.

“As usual, the lion’s share of export is going to Egypt, which is typically taking 65-75 per cent of the Australian crop.”

Mr Darcas said Egypt was currently showing limited interest in Australian faba beans, which are competing against UK and Baltic product.

Mr Darcas said Australia’s domestic feedmills have switched away from field peas to faba beans, which are now more readily available and cheaper than peas.

“At the moment, they have the best price for growers, which also means it’s hard to see prices going much lower than where we see prices today.”

“They have put a floor in the market.

“If we have rising prices in soymeal and wheat, that will create more demand for faba beans in Australia.”

Mr Darcas estimated Australia’s domestic market for faba beans to be around 100,000t a year.

“At the end of the day, we still need a large food-export business to sustain demand for the large crops we have at the moment.”

Mr Darcas said fabas grown in NSW might end up in the domestic market because they will struggle to get bulk export slots ahead of wheat, barley and canola.

“Evidenced by shipments from Victoria and South Australia, the market found a solution last year with more bulk ships, and I think we will see the same again.”

Lentils

Lentil prices have kicked by around $50/t in the past month in response to a heady bulk-export program out of Victorian and South Australian ports, and news of the Indian tariff cut.

Container packers are now paying close to $900/t, up from $800-$850 last month, and delivered port prices are well over $1000/t.

Mr Alexander estimates the 2020-21 (Nov-Oct) lentil crop plus carry-in was around 1Mt, with 940,000t of that exported.

Major markets were Bangladesh on 300,000t, and India and Sri Lanka, both on around 150,000t.

“The market was very simple last year; it was bullish all the way.”

He said the poor Turkish crop, and the drought-hit Canadian crop, coupled with India dropping its tariff on Australian lentils to 10pc from 30pc, fuelled demand.

“You’ve also got to throw in the rising cost of freight.

“We were getting freight doubling and tripling and worse.”

ABARES most recently estimated Australia’s 2021-22 lentil crop at 655,800t.

“Heading into this season, I’d say there’s probably 50,000t of lentils still kicking around, and another decent harvest is coming.”

Mr Alexander said new-crop prices can be expected to soften and stabilise based on an expected increase in global supply.

“If Turkey has a normal crop and if Canada has a normal crop, we’re going to have plenty in 2022.

“We should those prices come off a bit.”

Mungbeans

Early crops of mungbeans in both Australia and Myanmar are now being harvested, and the Myanmar offering is catching bids from China and India.

Trade sources say Myanmar mungbeans are trading at around US$950/t landed, and China’s demand for new-crop Australian beans has ebbed.

As a result, bids to Australian growers have dropped around A$100/t from their peak, and now sit at roughly $1200/t for No. 1 grade, $1100/t for processing and $1000/t for manufacturing.

Speaking last week at PB Agrifood, Toowoomba, for the launch of the Queensland Department of Agriculture and Fisheries pulse-storage guide, Warra grower and AgForce grains president Brendan Taylor said Downs crops varied in maturity from just planted to near harvest.

“There are a lot of beans across the Downs that are two or three weeks away from harvesting after a mid-December planting,” Mr Taylor said.

“Putting my farmer eye across them, I’d expect them to yield 2t/ha upwards.

“Plantings done between January and now are quite small, and they’ll need more rain to get them through to a significant crop.

“The early crop is certainly one of the better crops I’ve seen for a number of years.”

 

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