Markets

Pulse Update: Lentils surge amid ongoing container woes

Liz Wells, August 18, 2021

Queensland’s central highlands typically produces Australia’s earliest chickpea crops. They are now flowering, and most will be harvested in October. Photo: Renee Anderson

THE reduction of India’s tariff announced late last month and the plight of the drought-hit Canadian crop have shifted nearly all the action in Australia’s export pulse trade this month to lentils.

Their value has risen 15-20 per cent since India’s announcement, while faba bean prices have firmed slightly, and the chickpea market has softened in very thin trade.

As container rates to South Asia and the Middle East continue to rise to unprecedented levels, traders appear reticent to book new-crop tonnages of chickpeas and lentils destined for the boxed trade.

On the production side, chickpeas, faba beans and lentils are all looking at average to above-average yields, although excessively wet conditions may bite some chickpea and faba bean crops in parts of central and northern New South Wales.

Growers everywhere are mindful of a wet spring on the forecast, and are applying fungicides as needed to ensure good quality at harvest as best they can.

All prices quoted are AUD.

Chickpeas

Chickpea prices have softened in minimal trading, with the Downs market falling about $50/t over the past month to $580-$600/t for current and new crop, and Narrabri in northern NSW trading at more like $550/t.

The prices are not enough to encourage much forward selling from growers, and the trade is reticent to book forward business because of uncertainty around container freight.

AGT Australia trader Mitchell Elks said very little new-crop business had been written, largely because containerised freight rates were still rising.

“No-one is going to put their finger on where freight rates will be,” Mr Elks said.

“Once we see them stabilise, we’ll know where we’re at.”

Pakistan and Bangladesh are currently Australia’s biggest chickpea markets.

Bangladesh as a bulk customer is expected to be the destination for Australia’s first new-crop cargoes out of Mackay and Gladstone in Central Queensland.

Pakistan has bought only two bulk cargoes of Australian chickpeas in the past decade, and therefore relies on containerised deliveries to fill the deficit left by its small crop harvested earlier this year.

Congestion at transshipment hubs in South-East Asia continues to be a problem, and Mr Elks said it was preventing the steady flow of product to Pakistan, and instead seeing it go sometimes several weeks without deliveries.

“It causes surges in offshore markets, and the business comes in waves of a month to a month and a half.

“There might be nothing, and then they get swamped with maybe 2000 containers of desi chickpeas turning up at once.”

On the production front, yields prospects for chickpea crops in Queensland and northern NSW are expected to be average or better.

With a wetter-than-average spring forecast for major chickpea-growing regions, most growers are already spraying fungicide on crops to reduce the risk of disease.

Australia’s desi chickpea harvest is expected to start in the central highlands of Queensland in October, and be going full tilt in the Western Downs of southern Queensland by November.

Mr Elks said “It should take 30-50 days to get to the subcontinent, and it’s taking 90 days for some boxes.”

Pakistan is Australia’s biggest-volume chickpea market in the current year, and is expected largest.

Faba beans

The delivered port market for current-crop and new-crop faba beans has firmed a little in the past month to $380/t and $390/t respectively.

This is up around $20/t in the prompt market, and $10/t for new crop.

The hike reflects reduced availability of big parcels of fabas in the domestic market, and their prevailing appeal to stockfeed millers who are faced with rising wheat and barley prices being carried along by the global complex.

Viterra is booked to load 21,000t of faba beans in South Australia for Egypt this month which will take Australia’s total sales to that market to a record of more than 400,000t.

The shipment is expected to complete Australia’s bulk export program for faba beans ahead of new crop hitting the market in November.

“Egypt is well covered, so not in a hurry to buy much more,” Agri-Oz Exports managing director François Darcas said.

The European faba bean harvest has started, and will likely provide Egypt with additional tonnage in coming months.

“The UK faba crop is up in tonnage, but we have little information yet as to quality, and the Baltic crop looks stable to possibly a bit lower as it was affected by a hot summer.”

The freight complex is also affecting faba beans as one of the lowest-priced of Australia’s pulse exports.

Containerised freight from Australia to Egypt is today worth around $130-$135/t, up from roughly $50/t 12 months ago.

Traders report some containerised Australian grain and pulses is therefore going through the Panama Canal to get to Middle East markets.

Even though the trans-Pacific route is double the distance of going across the Indian Ocean, its rates are comparable or cheaper, and services from some lines are more frequent.

Lentils

Lentil prices have risen $130-$150/t this month in response to India cutting its tariff, and Canada’s drought-reduced production.

It means markets including Turkey, normally supplied by Canada, are looking to Australia for bulk lentils, and Grain Central understands some are loading in South Australia this week.

Up-country packers are now paying $920-$950/t and up to $975/t in places, depending on location, for prompt and new-crop lentils.

Melaluka Trading principal Michael Fitzgerald said growers were booking some lentils into new-crop slots with the backstop of having some current-crop on hand.

Like chickpeas, lentils store well, and if a wet or late harvest troubles quality, growers with stocks will not be caught short.

“With lentils, if they’ve been stored alright, some growers that are carrying old crop are taking price coverage on new crop, and will be able to deliver in Nov-Dec if they get a weather issue.

“New-crop is paying about $15/t higher than prompt, but that’s just the cost of carry.”

With Australian wheat the most attractively priced in the world, and barley competitive too, shipping terminals in south-eastern Australia are not seeing the usual slowdown in activity as current-crop stocks run down.

This means lentils are facing competition on the shipping stems in the nearby.

Trade sources told Grain Central lentil stocks in South Australia are drying up, but are more plentiful in Victoria.

Both states are expecting mostly average yields from the upcoming harvest, although some crops in SA’s Mid North and Murray-Mallee, and the Victorian Mallee, need some rain soon to ensure good results ahead of the harvest start in November.

Mungbeans

Demand for mungbeans into the key export markets of China and Vietnam remains strong, but unsold stocks are limited, and manufacturing-grade mungbeans are holding at more than $1000/t delivered Downs packer.

“The season is done, and we’re executing the last few orders,” Mr Elks said.

 

 

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