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Pulse Market Insight #148 JUN 2 2017 | Producers | Pulse Market Insights

What’s Happening with Chickpeas?

Because of the dominance of peas and lentils in Canada’s pulse markets, there hasn’t been a whole lot of discussion about chickpeas lately. But that doesn’t mean there’s nothing going on; chickpea growers in Canada have seen a very friendly market over the past year.

Typically, kabuli chickpea markets are driven by events overseas, especially in India and Mexico, and that’s been the case in 2016/17. A year ago, both of these key exporting countries experienced poor crops, which made a tight global supply situation much more serious. Prices for kabuli chickpeas in these two countries took off and that triggered rallies in other countries, including Canada and the US. Simply put, there were few if any global supplies of kabuli chickpeas, especially larger calibres.

In western Canada, 2016 production was up over the previous year, but overall quality was lower. In spite of these problems, there was no difficulty marketing last year’s crop. The US is Canada’s largest buyer and even though some of the crop was damaged, there was strong demand from the pet food sector. Farmers told us they were selling Sample grade chickpeas in the mid-to-high 30s with buyers aggressively sourcing this product. For those who had high quality chickpeas, prices for 9 mm or larger were double that amount and, aside from the Indian “restricted import panic” in February, have held at those prices through most of 2016/17.

The outlook for chickpea prices is mostly bright. The latest chickpea crops in India and Mexico that have just been harvested are larger than last year but because pipeline supplies were so low, these bigger crops haven’t been able to replenish supplies and global prices are still historically high. In addition, there are concerns about dry conditions in Turkey for its chickpea crop that will be harvested in June/July.

At this early point in the year, the Canadian crop outlook for 2017 is looking at a 10% decline in acreage but a recovery to average yields would mean a crop similar to last year, close to 120,000 tonnes. Supplies will be low enough to keep the 2017/18 export program limited and keep prices somewhat supported.

If there is a cloud on the price horizon, it’s coming from south of the border. Because the US is Canada’s largest buyer, there’s potential for events south of the border to cause some market softness. Good prices and a positive growing experience last year are encouraging farmers there to add more acres. Seeded area had already increased in 2016, but the USDA is forecasting another 53% increase in 2017.

If the US does produce a much larger 2017 crop, it will limit the demand for Canadian chickpeas. That said, Canadian buyers have been bidding very aggressively for new-crop kabuli chickpeas, in the 50 cent ballpark. Even if fewer Canadian chickpeas move into the US in 2017/18, there’s plenty of demand from other destinations that is keeping the market supported. And because of the timing of global harvests, that strength is likely to remain in place until early 2018, if not longer.

Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.