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Demand for pulses near record levels as global markets chew through Canadian inventories DEC 16 2020 | Producers | Blog Post

Canada’s projected carryover inventory of many major crops including peas and lentils may reach low levels rarely seen in the last two decades due to competing global market forces.

Viterra Senior Merchandiser Keven Sawchuk detailed how market demand and trade pressures around the world have influenced Alberta’s pulse industry at the virtual annual general meeting for Alberta Pulse Growers’ Zone 1 in early December.

“I would say that in Canada we’re looking at a sub 10 million tonne carryout this year, which has only occurred about three times in the past 25 years,” he said. “This creates a generally bullish picture around new crop intentions for planting and supports a strong outlook on a number of commodities, not just pulses.”

Sawchuk outlined the StatsCan production numbers continue to be revised upward for most pulses. Lentils did show a slight decrease in the December report.  He then detailed international production challenges, low inventory levels and changing supply channels that are affecting international market demand. These include short-term tariff abatements from India, container shortages in Asia and elsewhere, currency devaluation, natural disasters and food shortages.

“These are definitely interesting times as markets try to manage their way through food insecurity, food price inflation, and high demand for affordable proteins,” Sawchuk said. “Many of our destination markets for pulses are seeing currency devaluation at the same time as they’re seeing food shortages and food insecurity.”

Additionally, there is a significant amount of demand for humanitarian aid expected for crops like split peas and lentils. The shorter cooking times for split pulses are especially important for refugees and migrants where cooking fuel is in short supply.

Sawchuk added another factor that tips the scales towards stronger demand is that China has been a decreasing producer of exportable pulses in recent years.

Some areas of the world had production challenges and shortfalls. However, Australia’s harvest is near complete and expecting a post-production increase of about one million tonnes over 2019.   Australia has started selling and shipping new crop pulses into the Indian market and other major pulse markets.

“For those growers that had been participating in a pretty steady upmarket on commodities like red lentils, peas and others, you’ve likely seen bids take a breather recently,” Sawchuk noted. “Australia has a significant freight advantage into the Indian market and they’ve been aggressive early sellers and likely to fill a lot of the nearby demand. That said, they are also facing transportation challenges. I think there is some seller’s regret on some of the early sales due to escalating freight costs and availability. Australian dealers should be looking to recapture some of that on their forward sales. The Australian crop will play an important role in the coming days and weeks.”