Latest News from India Positive

After more than five years of blocking yellow pea imports, India resumed trade in December by dropping its import tariffs from 50% to 0% in an effort to keep food costs under control. This was welcome news, but the short-term deadlines made it difficult for exporters to plan. The first zero-tariff announcement had a deadline of March 31, which was bumped to April 30 and then extended to June 30.

Canada was able to capitalize on the reopening of the Indian market. Pea exports to India were 104,000 tonnes in December, 250,000 tonnes in January and 345,000 tonnes in February. In March, exports dropped sharply to only 21,000 tonnes, partly due to the deadlines but also the shrinking supplies of Canadian peas. This midseason surge in Canadian exports to India was especially valuable as shipments to China dropped off.

In essence, the Indian government has been kicking the can down the road but not quite far enough to allow a steady flow of pea imports. We’re not quite sure why peas are being treated this way, when the Indian’s government’s zero-tariff deadline for other pulses all have a deadline of March 31, 2025, the end of India’s marketing year.

Recently, the Indian government kicked the yellow pea import can further down the road, this time with a deadline of October 31, 2024 for the bill of lading to be completed. At the same time, India cut its 60% import tariffs for desi chickpeas to 0%, with a deadline of March 31, 2025. We were not surprised by these moves, as prices for yellow peas and especially desi chickpeas in India had started to turn higher recently.

Canadian supplies of old-crop peas are very low, so this latest announcement won’t trigger sizable exports for the rest of 2023/24. Western Canadian bids for old-crop yellows made most of their gains back in March and April, and this latest announcement hasn’t had much impact on old-crop bids. Mainly that’s because there aren’t many Canadian peas available and low pea prices in India aren’t encouraging fresh sales of old-crop yellows.

This latest announcement is much more helpful for new-crop Canadian peas which will now be able to meet this October 31 deadline. The reaction in new-crop yellow pea bids has been more noticeable, which are climbing toward old-crop levels. The chart shows average bids across western Canada, but new-crop bids of $12.00 or higher are becoming common and are the highest since the tail end of the 2021/22 drought year.

Despite this good news, there are limits to the upside potential. The chart of Canadian exports shows shipments to India this winter offset a large drop in demand from China, which was caused mainly by new competition from Russia. And India isn’t just importing Canadian peas; Russian peas are competing in the Indian market, either directly or through Turkey.

There are question marks about 2024 Russian pea production, with drought and frost reducing the crop potential but output will still be large. Last year’s crop was a record 4.6-4.8 mln tonnes and early projections for 2024 were even higher. Even if yields are reduced, the 2024 Russian pea crop could be close to last year’s record. The presence of Russian peas competing in both China and India will tend to limit upside potential for yellow pea prices.

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