As of June 23, the government of India's weekly planting estimates show planting progress of all 2017/18 kharif (summer) crops 9.6% ahead of the same date in 2016, although the report indicates planting of pulse crops at 1.475 million acres, down 33.7% from the same week last year and the slowest pace in three years for this week. Planting of pulses stands out from data reported for other crops, with all other major crops well ahead of last year's pace.
Reports point to the early start of the 2017 monsoon season. While June rainfall is higher than normal to-date, DTN forecasts indicate India's monsoon to be 10 days behind normal in terms of movement across the country with concerns focused on the central states of the country, although there are calls for improved moisture over the next week. The government's long-term forecast suggests the 2017 monsoon season will deliver normal amounts of precipitation or 98% of the country's long-term average moisture.
While the summer or kharif pulse crop is the smaller of the two crops produced during the year, the government's latest estimates suggest that 40.7% of the 2016 pulse production was produced in kharif production, while the five-year average is 33.2% of the total crop. Given that the country's imports increased in 2016/17 to a record 6.4 mmt despite record production, market watchers are focused on 2017 production potential, with a lag in planting activity viewed as an alarming sign.
Financialexpress.com reports Monday that producers in various states have turned to more profitable crops such as cotton. There also exists a great deal of finger pointing towards the government over the lack of a strategy or policy needed to meet the growing demand. As indicated on the attached chart, the most recent estimates pointing to record production of 22.4 million metric tons of total pulses produced in 2016/17, 36% higher than the previous crop year, which still led to an estimated 500,000 metric ton hike in imports to a record 6.4 mmt.
As a result, red flags have been raised over what happens when production falls. The orange bar on the attached chart represents a hypothetical 10% reduction in 2017/18 production based on a private estimate by G.Chandrashekhar, as reported in Saskatchewan Pulse Grower's June Pulse Market Report.
This uncertainty comes at a time when India's trade rule surrounding fumigation of pulse imports, a rule change that is detrimental to Canada's export potential, is set to change on June 30 after a three-month extension was negotiated. The Canadian industry remains hopeful that a solution will be reached by Friday.
Given the increased risk, bids for lentils and yellow peas have faced pressure. Large green lentils delivered to Saskatchewan plants are bid at $44.67/cwt, the lowest seen since mid-August. This compares to the current range of new-crop bids of $34 to $41/cwt, as reported by Statpub.com. Red lentils are indicated at $21.75/cwt delivered to Saskatchewan plants, the lowest price reported by Saskatchewan Agriculture since March 2014. New-crop price is consistent, with the range indicated at $20 to $24/cwt. Yellow peas have faced only light pressure, down to $9.33/bu after reaching $9.58/bu last week and the highest value reported since July 2016. New-crop is bid at $7.80 to $8.25/bu, pointing to potential risk in storing old-crop.
In advance of Thursday's Statistics Canada acreage estimates, the average of pre-report estimates reported by media point to Canada's dry pea acreage at 4 million acres, roughly equal to the Statscan estimate released in May, down 5.6% from 2016 but higher than the five-year average of 3.792 million acres. Prairie lentil acres are estimated at 4.4 million acres, again close to unchanged from Statscan's earlier estimates, 24.9% lower than estimated for 2016 but still well above the five-year average of 3.650 million acres.
Weather will be the key going forward, both in India and the prairies.
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