India Uncertainty

The diplomatic situation between Canada and India has been getting a lot of press in the last week or two and has been raising some concerns among Canadian pulse exporters. While that issue is worth discussing, there are plenty of other developments in India that could have even larger impacts on the pulse outlook.

One of the most important factors in the Indian pulse market is monsoon weather. The summer kharif season is now winding down and the monsoon rainfall has been plentiful across the entire country. Even though tur (pigeon peas), the biggest kharif pulse crop, isn’t grown in Canada, there is a connection to pulses here. When tur supplies in India are low, demand for imported green lentils as a substitute tends to increase. This year, more tur acreage and high yields will mean a larger crop in India and will limit Indian demand for green lentils. Fortunately, there’s been strong demand for Canadian green lentils from countries other than India this year, and the impact will be limited.

The rain in the monsoon season is also important for the upcoming rabi winter season, with planting of red lentils, peas and chickpeas just about to get underway. Because this is the drier season for Indian agriculture, the rabi crop needs good soil moisture for early development. As the map shows, the summer monsoons have set the stage for good crop establishment.

Indian farmers will be encouraged by favourable moisture during planting, and the Indian government recently provided more incentive. Last week, it announced higher Minimum Support Prices (MSP) for several rabi pulse crops that will be harvested in Feb-Apr of 2025, including red lentils and desi chickpeas.

When the MSP has been lower than the market price, it hasn’t had much influence on Indian farmers’ planting decisions but when the market price is lower, as it is now, the MSP could encourage more red lentil acreage. It’s still too early to make any serious production forecasts, but another large red lentil crop in India could blunt demand for Canadian lentils export prospects a few months into 2025.

In addition, India’s open borders for yellow pea imports may not last beyond the current deadline of December 31, but this has nothing to do with diplomatic tensions. Indian prices for both desi chickpeas and yellow peas (the substitute for desi chickpeas) have been dropping. The lower prices are a signal for the Indian government that supplies of these two crops are already comfortable or will become plentiful soon. Australia is currently harvesting a very large desi chickpea crop which will be arriving in India in the coming weeks. At the same time, reports indicate Indian farmers will boost acreage this season. This means the Indian government would be able to close the border to yellow peas without too much disruption, at least within its own borders.

All these factors (and a few other smaller ones) will actually overshadow the dispute between the Canadian and Indian governments. And the fact that there hasn’t been an immediate response from India with respect to trade suggests the dispute may not trigger the Indian government to restrict imports of Canadian pulses. If there are trade disruptions in the coming months, they’re more likely to result from other factors.

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