Chickpea market steady, waits for next wave of demand

MarketsFarm — Demand for chickpeas often comes in waves, with the market currently in a lull waiting for the next swell.

The last demand cycle came in early January, and the market has lacked “any kind of enthusiasm” over the past month, according to Colin Young of Midwest Grain at Moose Jaw.

Within every pricing cycle, the market starts low, then eventually ratchets up to levels where Canadian chickpeas become competitive, Young said, noting “at every wave of demand, we’re forced to compete with markets that sell for cheaper.”

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International prices had strengthened in early January, but were back to where they were before the buying interest by mid-February, as end-users are covered for the time being.

“I do anticipate there to be another one or two buying cycles before the new crop year,” Young said.

However, while that buying interest should support prices, he expected any upside would be limited as buyers are apprehensive to take on inventory and are looking for commodities that are easier to turn around for a profit.

“My advice to farmers is, if there is a rally, sell into it.”

Farther afield, India looks to be growing relatively decent desi and kabuli chickpea crops, while the Turkish government is sitting on large stocks of eight-mm kabulis it will likely soon release. Argentina also just finished its harvest.

“We’re on pace to reduce acres in North America,” said Young.

On top of the price outlook, disease issues in the primary chickpea-growing region would cut into area from an agronomic standpoint, he said.

Many growers with whom Young deals were taking a year off of growing chickpeas and seeding lentils instead, while keeping some old crop in the bin in case of higher prices.

Lentils have a better return outlook and are affordable to grow, he said.

Early estimates from Agriculture and Agri-Food Canada forecast chickpea area in the country for 2020 at around 300,000 acres, which would be down roughly 25 per cent on the year.

The acreage cut could be even more severe, Young said, with a possible return to the 140,000- to 160,000-acre crops seen prior to 2018.

Kabuli chickpeas are currently priced in the 24-28 cents/lb. area in Western Canada, according to Prairie Ag Hotwire data. Prices have traded in a wide range since harvest, and any farmers with unsold chickpeas now likely content to wait for their target.

Young expected 30 cents/lb. was a likely “emotional threshold” that would generate some sales.

However, he added, the relative volatility of the chickpea market — and resulting possibility of large price increases — could also see growers keep chickpeas in storage while freeing up bin space and generating cashflow by moving crops with less upside potential instead.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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