Canada Markets

The Government of India released its 2nd Advance Estimates for 2016/17 crop production on Wednesday, with a record foodgrains production of 271.98 million metric tons estimated, more than 20 mmmt higher than final estimate for 2015/16. Record production is expected for rice, wheat, coarse grains, pulse crops and oilseeds.

The country's pulse crop production is estimated at a record 22.14 mmt, far exceeding the 2013/14 record of 19.25 mmt, and as seen on the attached chart, well-above the 16.35 mmt produced in 2015/16 and the five-year average of 17.636 mmt, as indicated by the horizontal black line. This still falls short of demand estimated at 23 to 24 mmt.

On Feb. 3, the country's Ag ministry released its final weekly estimates for seeded acreage showing an estimated record 39.5 million acres seeded to Rabi or winter pulse crops, up 11.1% from the previous year and well-above what they report as "normal" acreage of 34.8 million acres.

Market watchers will be quick to point out that from here forward, weather is everything, as unseasonal rains and hail in March and April reduced the quantity and quality of the crop produced in 2014, 2015 and 2016. Current DTN forecasts present no concerns for the crop at this time. The latest data from the India Meteorological Department shows the country as a whole receiving moisture that is 29% above the long-term average in the Jan. 1 to Feb. 8 winter season, which ranges from 99% above average for northwest India to 86% below average for east and northeast India. Forecasts for the following weeks into early March ranges from near normal to above normal for the country. This data will be updated later this week.

Earlier this week, the India Pulses and Grains Association appealed to the government to "review and renew" the country's export ban on pulses that has been in place since 2006/07. The move would be viewed as a source of encouragement for producers, would help level out prices from wild swings and would result in an important new source of revenue for producers. "It is the trade's submission that in the current scenario of increased production, prices falling below MSP and government's intention to bring agricultural reforms are an opportune time to remove the ban and enable exports of pulses for the country," said Pravin Dongre, Chairman, Indian Pulses and Grains Association in a press release.

Another concern is what producer.com refers to as a looming "export crises" for pulses shipped to India. India's plant quarantine directorate has recently announced that it will not extend an exemption to its methyl bromide fumigation policy that is set to expire on March 31, rather, will requiring exporters to fumigate at the country of export. This policy has been in place since 2004 and favors colder climate shippers such as Canada who struggle with temperatures that can be too low for proper fumigation and the move may be simply viewed as a barrier to trade given expectations for a record homegrown crop in India.

Pulse prices are coming down in India with reports of weak demand. The country's retail inflation rate dropped to 3.17% in January, slightly below the 3.41% reported in December and the 5.69% reported in January 2016. Pulse prices play a large role in the determination of this data, which fell by 6.62% in January alone.

Developments in the global market will have a bearing on old-crop and new-crop pricing. Statpub.com reports the average bid of $64.81/cwt delivered to Saskatchewan plants for large green lentils, unchanged from last week, while new-crop is indicated at $37.50 to $39.50/cwt. Red lentils continue to face gradual pressure, reported at $26.69/cwt delivered to Saskatchewan plants while new-crop is indicated at $22.30 to $23.50/cwt delivered.

Dry pea prices have stabilized at $8.98/bu for No. 1 yellow peas and $8.96/bu. for greens. While no new-crop bids are shown for yellows, new-crop greens are indicated at $8.10 to $8.50/bu.

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DTN 360 Poll

The latest USDA oilseed forecasts point to canola meal imports in China skyrocketing, although imports of canola/rapeseed is lagging. Would you rather see the export of products (oil/meal) than bulk seed? You can share your thoughts on this week's poll that is found at the lower right side of your DTN Home-Page.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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