Canada Markets

India's Agriculture Minister Radha Mohan Singh demonstrated confidence this week at a conference focusing on the potential for the winter Rabi crop, despite the El Nino-related impacts on the annual monsoon season, as reported by the Hindu BusinessLine. The earliest target for the winter Rabi crop is set at 13 million metric tons, .5 mmt higher than the initial target for 2014/15, with the winter crop generating an average of 65.9% of the total production over the past five years.

Last week, India's agriculture ministry released its 1st Advance Estimates for the 2015/16 Kharif or summer crop, with an expected production of 5.56 mmt, which is slightly higher than the initial 2014/15 Kharif production estimate of 5.2 mmt, but below the final 4th Advance Estimate for the 2014/15 crop of 5.63 mmt, as well as the initial target for 2015/16 of 7.05 mmt.

Planting progress for the summer Kharif crop remains well ahead of last year. As of September 18, planting progress for all crops was reported as being 1.6% ahead of last year, while planting of pulses was estimated at 11.6% ahead of last year's pace at 27.8 million acres.

While the Indian government is taking credit for its "multiple interventions" which are suggested to contribute to the successful Kharif season, the 5.56 mmt production falls short of the initial target of 7.05 mmt. When added to the Rabi target of 13 mmt, this leads to the 20.05 mmt total pulse production target for 2015/16, shown by the red bar on the attached chart.

The focus going forward will remain on projections for the winter crop and the impact of deficient monsoon moisture which is related to the current El Nino event. Today's monsoon rainfall coverage released by India's Meteorological Department shows the India's monsoon coverage is 13% below normal between June 1 and Sept.24, an improvement of 2% from last week although greater than the 12% deficiency recorded over the 2014 monsoon season, the worst in five years.

While production estimates for the winter crop will not be released until February, the initial target is 13 mmt which contributes to the 20.05 mmt target for 2015/16, as indicated by the red bar on the chart. This will be the number to watch going forward. The 2014/15 winter crop target was 12.5 mmt, while actual production estimates slipped from 12.93 mmt in February to 11.57 mmt in the 4th Advance Estimate released on Aug. 17. Total production in 2014/15 fell by 2.05 mmt from the previous year to 17.2 mmt, 2.3 mmt below the target of 19.25 mmt, paving the way for exports of prairie production.

Despite the current outlook for a recovery in production this crop year, the Indian government's growing involvement in the market could be viewed as mixed. The Agriculture Ministry has proposed a 10% duty on pulse imports, which would add the cost of importing product while seeking to reduce reliance on imports, as reported by the Hindubusinessline.com. As well, another report from the same source indicates that the government has extended the order which allows for the government regulation of trade until Sept. 30 2016. This was initially set to expire Oct. 1 and also includes the trade of edible oils and oilseeds. This regulation allows individual States to regulate stocks and "other measures to curb unscrupulous trading, hoarding and profiteering."

In yet another release by The Hindu BusinessLine (India needs a pulses revolution, Sept. 22 2015), the government is criticized for its "abysmally mediocre policy intervention and equally unimpressive agricultural budgets." Despite close to a 40% increase in production in 40 years, the per capita availability is reported to have fallen from 60 grams per day per capita to 35 grams per day.

This trend is blamed on:

-- Rice-wheat rotations which deplete soil moisture;

-- Unorganized pulse markets and wild fluctuations in price;

-- Low yields and the negative impact from pests and disease;

-- A lack of technology and managerial capacity;

-- A lack of irrigated pulse acres; and

-- A lack of producer awareness.

Spot prices for peas on the Prairies have remained steady since harvest at $9/bushel for yellow peas, $8.06/bu for greens and $4.78/bu for feed, delivered to Saskatchewan plants as reported by Statpub.com. The current price for yellows is 45% higher than this time last year. Prairie lentil prices also remain steady over recent weeks, with large greens at 45.31 cents/lb and reds at 32.75 cents/lb delivered to Saskatchewan plants. Large greens are trading 33% above 2014 levels.

DTN 360 Poll

This week's poll asks what percentage of 2015 production have you priced in your operation? You can weigh in with your thoughts on DTN's 360 Poll, which is found on your DTN Homepage.

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

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(ES)

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