pulse outlook 2015/16 & 16/17 · ragi 1500 1550 1650 106% a r h ar (pi g eo n pea) 4300 4350...

SPG REGIONAL PULSE MEETINGS 2016

PULSE OUTLOOK 2015/16 & 16/17

Mercantile Consulting Venture Inc. Marlene Boersch, Owner & Managing Partner www.mercantileventure.com

Mercantile Jan. 2016

Presentation Outline

Global Econ. Framework

Outside influences:

-Purchasing Power

-Foreign Exchange

-Freight rates

World Pulse Trends

-India/ China, consumption trends

-export competition

-returns per acre

Canadian Balance Sheets

-Marketing current pulse crop

-Market power/ Mkt. share

Forecasts

New Crop pulses


Conclusions

Intro: Outside Drivers of the Ag markets

World food supply & demand

interaction

Macroeconomic & Trade Environment

Climate , energy, natural

resources

Price & income prospects: more

uncertain than before

Population, diet, food chain

Mercantile, Jan. 2016 3

Intro: Pulse markets vs. major crop dynamics 2015/16 Why are they acting so differently?

• Importance India & China – economic growth areas

• Different pulse fundamentals:

• Demand increasing, supply ~ static; ending stocks falling

• Weather problems concentrated in single largest producing region

• There is a need to increase supply, not reduce it: see price signals

• Canada has a production advantage [see yields] – affects access to mkts.

• Canada owns a significant market share

• Cdn prices are determinant [>than 30%; Lentils, peas, canola, flax, oats]

• Special risk: dependence on Indian mkt.


Section 1

Outside Influences

• GDP-buying power

of importers

• Foreign Exchange

• Ocean freight

developments

• Government

interference

• Weather (El Niño)


Macros World, India, China - Demand aspects

Sources of import demand increases

• Population driven (#’s)

• Income driven ( GDP)

• Production shortfalls importing country (weather, other crops, industrialization, etc.)

• Changes in consumption habits (ex. Income-driven higher meat/ protein demand China, India)

• Man-made demand shocks (ex. Biofuel demand-can take acres from other

crops; changes tariffs; policy changes (stock regln’s, buffer stocks, MSP’s,

etc))

Mercantile, Dec. 2012 6

Forecasts (Statista 2015)

Mercantile, Dec. 2015 7

Global economic growth: the optimist’s view


GDP forecasts

According to the IMF, Developing Countries accounted for 58% of global output

in 2015, when measured at purchasing-power parity (PPP).

• China has been the source of 35% of global growth over the past five years,

and is forecast to form 30 per cent of growth until 2020.

• Estimates are for much lower growth, of 6.5-4.8% this year, following 4.3% in 2015.

• India: Estimates point to growth of 7.8%, slightly higher than in 2015; the

economy continues to benefit from lower oil prices. India also still has

relatively high interest rates, so could use monetary policy if growth slows.


Foreign Exchange

Change relative to USD:

EUR: 23%

CAD: 43%

Real: 147%

Hryvnia: 212%

Rupee: 52%

RUB: 162%

(2011 Jan. 26, 2016)


U.S. farm income struggle shows how insulated by FX

Canadian farmers are currently


Focus on Russia – can sell very cheaply internationally


Ocean freight

developments –

bulk freight

Annual change:

Brazil – EU: - 5%

US Gulf -EU: -18%

US Gulf – Japan:

- 33%

- Down 12% since Jan. 1/16


Bulk freight Index: down 26% annual change


Bulk ocean freight: record low levels

Container freight: relatively dear

Example India

Bulk freight: US$23-25/mt (dep. Discharge rates)

Cntr. Freight: ~US$80/mt (incl. doc. Fess, stuffing; 26.3 mt/cntr)

Difference: US$55/mt

China – bulk freight: US$12/mt (Panamax)

• Influenced bulk vs cntr sales

• Good for trade volume


Government

interference

Example:

Jan. 26/’16 –

“Cartel

hoarding dal

stocks abroad

to jack up

prices: IB”


Import of pulses to India currently free, but that could

change…


Weather

- El Niño -

… Biggest pulse

growing areas

affected 2 yrs

running…

- Next year?


World Pulse

Markets

• Who are the major producers and what are the major pulses?

• Where does Canada fit

• Understanding the majors

• India & China

• Further mkt targets

• World balance sheets


Canada’s place: World pulse production – top 10, 1961-latest factfish

1961 latest


World pulse production, 1961-2013

40.8 mln mt 73.2 mln mt (+79%) factfish


Canadian pulse production since 1961 ( zero 6 million mt in 2015; Canada represents 18.5% of total pulse prod’n growth )


Total pulse production factfish


Which pulses dominate? Shares of different legume

crops in total global area and production, 2006-08

Area Tonnes produced


World Pulses

Tonnage & yield

changes by crop


Acreage trends pulse crops


Trends in export volume by pulse


Demand – Understanding India

• Domestic production: Down • Weather/harvest shortfalls

• Spending on food: % of income spend on food down • From 1999 to 2012 the expenditure on food has fallen from 59.4% to 52.9% in rural areas

and from 48.1% to 42.6% in urban areas

• Effect higher income: “Change in income distribution and income levels in India in recent years has led the demand for protein-based food items such as pulses, eggs, milk and milk products and meat products” -2013 study by the Ministry of Agriculture

• Shift consumption: Shift towards protein-based food, even as the per capita % of income Indians spend on food as has declined • Apart from beef, Indians are consuming more milk, eggs and chicken

• Substitution effect of higher cost domestic pulses


Recent change: “Indians seek protein”

NSSO, India

Rural spending on pulses Urban spending on pulses


Consumption trends by pulse Source: IFPRI


India

Source: Int’l Food Policy Res.

Inst.


Supply-side India - Food production


Understanding Indian pulse production


Why are Indian pulse yields low? Who grows pulses?


Supply-side India - Pulse production


• Production target: 20 mln mt

• “On current reckoning, pulse imports into India during the 2015/16 financial

year (April to March) is likely to reach the 5 M tonne mark. In 2014/15,

imports were 4.6 M tonnes.” (Quote, Indian analyst)

• Current Rabi seeding progress: 13.4 mln ha; same as lst yr; 5% below ‘avg.’


Target 20

mln mt

??

India-PulseBalanceSheet

Pulse Production Season 2011/12 2012/13 2013/14 2014/15 F 2015/16

Pigeon Pea (Tur) Kharif 2,650,000 3,020,000 3,170,000 2,710,000 2,650,000

Chickpea (Gram) Rabi 7,700,000 8,830,000 9,530,000 7,590,000 7,800,000

Urad Kharif 1,230,000 1,430,000 1,150,000 1,170,000 1,200,000

Rabi 540,000 470,000 550,000 440,000 450,000

Moong Kharif 1,240,000 790,000 960,000 860,000 825,000

Rabi 390,000 400,000 650,000 530,000 530,000

Other Kharif 940,000 620,000 720,000 730,000 600,000

Rabi 2,400,000 2,730,000 3,050,000 3,260,000 2,700,000

All Pulses Kharif 6,060,000 5,860,000 6,000,000 5,470,000 5,275,000

Rabi 11,030,000 12,430,000 13,780,000 11,820,000 11,480,000

Total Production Total 17,090,000 18,290,000 19,780,000 17,290,000 16,755,000

Pulse Imports Peas 1,457,000 1,690,000 1,469,000 1,825,000 1,850,000

Chickpeas 244,000 677,000 424,000 264,000 420,000

Lentils 259,000 793,000 637,000 620,000 600,000

Beans 1,067,000 1,272,000 943,000 889,000 950,000

Total Imports All Pulses 3,027,000 4,432,000 3,473,000 3,598,000 3,820,000

Available Supply and Inferred Consumption (production plus imports)

Total Supply Pulses 20,117,000 22,722,000 23,253,000 20,888,000 20,575,000

India – MSP’s India - Min. Support prices for 2015/'16

Rs/100 kg 2013-14 2014-15 2015-16

Change

from last

yr.

Rabi Season Crops

Wheat 1400 1450 1525 105%

Barley 1100 1150 1225 107%

Gram (Chickpea) 3100 3175 3500 110%

Masur (lentil) 2950 3075 3400 111%

Rapeseed-Mustard 3050 3100 3350 108%

Safflower 3000 3050 3300 108%

Kharif Season Crops

Rice Common 1310 1360 1410 104%

Jowar 1520 1550 1590 103%

Bajra 1250 1250 1275 102%

Maize 1310 1310 1325 101%

Ragi 1500 1550 1650 106%

Arhar (Pigeon Pea) 4300 4350 4625 106%

Moong 4500 4600 4850 105%

Urad (Black Matpe) 4300 4350 4625 106%

Groundnut 4000 4000 4030 101%

Sunflower 3700 3750 3800 101%

Soybean Black 2500 2500 N/A

Soybean Yellow 2560 2560 2600 102%

Sesame 4500 4600 4700 102%

Nigerseed 3500 3600 3650 101%


China - $ spent on food


China – pulse imports & exports

• Pulse Exports


World pulse production trends - Peas


World production - Peas


3,018 2,503 2,830

3,849 3,445 3,201

0

2,000

4,000

6,000

8,000

10,000

12,000

2010/'11 2011/12 2012'13 2013-'14 2014-'15 P2015-'16

'000 m

t

World Pea Prod'n Est. - Major Producers

Other

Pakistan

Indian Subc.

Russia

Ukraine

France

U.S.

Canada

Australia

World production - Lentils World Lentil Production Estimate - Selected Major Producers - All Lentil Types

(Historic Comparison)

2009/10 2010/11 2011/12 '2012/13 2013/14 2014/15 P2015/16

% of last

yr.

Australia 133 306 288 184 246 250 257 103.0%

Canada 1,510 1,910 1,523 1,473 1,886 1,987 2,373 119.4%

U.S. 264 393 215 240 198 153 240 156.9%

Turkey 302 500 400 375 305 450 400 88.9%

Syria 135 115 110 100 10 10 10 100.0%

Morocco 25 30 40 20 30 30 35 116.7%

India 700 890 820 700 425 585 750 128.2%

Bangla/ Paki 75 82 93 94 83 80 85 106.3%

Other 600 600 600 600 600 600 600 100.0%

Total 3,744.6 4,825.7 4,089.0 3,786.0 3,783.3 4,145.0 4,750.4 114.6%

Vol. rank

[1=smallest]

1 7 4 3 2 5 6

Mercantile, basis var. country stats, own calculations, Jan. '16


World production - Lentils


0

1,000

2,000

3,000

4,000

5,000

6,000

2009/10 2010/11 2011/12 '2012/13 2013/14 2014/15 P2015/16

Axis

Tit

le

World Lentil Prod'n Est.-Major Producers

Other

Bangla/ Paki

India

Morocco

Syria

Turkey

U.S.

Canada

Australia

World Chickpeas Source: STAT

WorldChickpeaProductionEstimateProduction (MT) 2010 2011 2012 2013 2014 2015

Australia 462,000 673,000 813,000 682,000 621,000 990,000

Canada 131,000 86,000 161,000 180,000 123,000 101,000

United States 88,000 100,000 151,000 161,000 127,000 129,000

Turkey 531,000 487,000 535,000 325,000 390,000 520,000

Spain 25,000 22,000 23,000 24,000 22,000 22,000

Mexico 132,000 72,000 272,000 210,000 160,000 147,000

Morocco 57,000 46,000 33,000 25,000 38,000 33,000

Syria 43,000 50,000 56,000 8,000 6,000 9,000

Pakistan 561,500 496,000 291,000 751,000 573,000 512,500

India 7,480,000 8,220,000 7,700,000 8,830,000 9,530,000 7,170,000

Other 1,400,000 1,657,000 1,639,000 1,666,000 1,717,000 1,631,00

Total 10,910,500 11,909,000 11,674,000 12,862,000 13,307,000 11,264,500


85% of

lst yr.

Desis & Kabulis

2010 2011 2012 2013 2014 2015

WorldDesiBalanceSheet

Production 8,891,000 9,855,000 9,238,000 10,710,000 11,170,000 9,116,000

Supply 9,015,000 9,925,000 9,348,000 10,742,000 11,208,000 9,117,000

Trade 728,335 908,914 1,417,820 640,000 809,000 867,000

InferredUse 8,945,000 9,815,000 9,316,000 10,704,000 11,207,000 9,027,000EndingStock 70,000 110,000 32,000 38,000 1,000 90,000

WorldKabuliBalanceSheet

Production 2,020,000 2,054,000 2,436,000 2,152,000 2,137,000 2,148,000

Supply 2,109,000 2,188,000 2,603,000 2,498,000 2,471,000 2,305,000Trade 462,000 387,000 471,000 503,000 408,000 512,000

InferredUse 1,975,000 2,021,000 2,257,000 2,164,000 2,314,000 2,184,000

EndingStock 134,000 167,000 346,000 334,000 157,000 121,000


Section 3

Canadian

Pulses


Canadian peas

PeaBalanceSheet 2012-13 2013-14 2014-15 F2015-16

Hrvstacres 3,645 3,269 3,624 3,705

Prod'n 3,334 3,830 3,600 3,201Supply 3,645 4,023 3,924 3,645

Exports 2,653 2,779 3,050 2,700C/O 167 394 299 270

stock-useratio 5% 11% 8% 8%


Peas by type


PeaBalanceSheet2012-13 2013-14 2014-15 E2015-16 Greens Yellows

Hrvstacres 3,645 3,269 3,624 3,705 700 3,005

Prod'n 3,334 3,830 3,600 3,201 690 2,511Supply 3,645 4,023 3,924 3,638 915 2,723

Exports 2,653 2,779 3,050 2,700 375 2,325C/O 167 394 299 263 175 88

stock-useratio 5% 11% 8% 8% ~23% ~4%

Pea Disposition

(CGC)GrainHandlingSummaryBulkPEAS Week23 (toJan.10/'16)

('000mt)Prod.Dlvrs.

Terminal

Rcpts. Bulkexports

Dom.

Disappearance

Week23 65.7 24.5 76.5 2.4

Weekago 50.0 3.5 0.5 3.9

YTD 1,658.3 1,345.3 1,433.5 87.2

LastYTD 1,662.7 1,323.0 1,329.8 171.4

YTDlessLastYTD(kmt) -4.4 22.3 103.7 -84.2

YTDoverLastYTD(%) 100% 102% 108% 51%

MercantilebasedonweeklyCGCHandlingData


Pea disposition by destination

MonthlyPEAExports 2015/'16Rank Country Aug.'15 Sept.'15 Oct.15 Nov.'15 TotalYTD LastYTD

Total World 255,166 563,472 354,428 138,880 1,311,946 1,469,6771 India 133,081 356,322 192,818 9,817 692,038 641,325

2 China 8,827 97,989 58,917 88,298 254,031 296,6763 Bangladesh 73,400 70,140 55,000 20,000 218,540 308,834

4 Cuba 26,260 21,000 17,850 65,1105 UnitedStates 3,241 4,702 6,058 5,629 19,630

6 Colombia 858 1,836 803 786 4,2837 Peru 580 1,424 1,084 311 3,398

8 Philippines 1,321 1,555 1,609 399 4,8849 Taiwan 735 1,109 940 1,231 4,015

10 Algeria 839 725 1,585 3,148Others 6,025 6,670 17,764 12,409 42,869


What is left of current crop peas?

000mt

15/16peasupply 3,638

peadeliveriesofffarm 1,700~forwardsold/notshipped 750

seedrequirements 350proj'dendingstocks 265

~peasleft 573 16%


New crop (‘16/17) peas - Canada:


PeaBalanceSheet 2012-13 2013-14 2014-15 F2015-16 P2016/17 % lst yr

Hrvstacres 3,645 3,269 3,624 3,705 4,137 112%

Prod'n 3,334 3,830 3,600 3,201 3,941 123%Supply 3,645 4,023 3,924 3,638 4,219 116%

Exports 2,653 2,779 3,050 2,700 3,000 111%C/O 167 394 299 263 544 207%

stock-useratio 5% 11% 8% 8% 15%

International pea supplies - Est. 16/17

World Pea Production Estimate - Selected Major Producers

('000 mt) 2010/'11 2011/12 2012'13 2013-'14 2014-'15 P2015-'16 P2016-17

Australia 434 304 320 342 275 215 300

Canada 3,018 2,503 2,830 3,849 3,445 3,201 3,941

U.S. 645 255 493 708 778 829 975

France 1,048 665 555 490 575 600 660

Ukraine 452 377 350 275 265 280 275

Russia 1,218 2,000 1,650 1,650 1,500 1,650 1,815

Indian Subc. 720 635 740 720 700 700 700

Pakistan 20 30 30 30 30 30 30

Other 2,800 3,200 3,000 2,900 2,900 2,900 2,900

Total Pea Prod'n10,355 9,969 9,968 10,964 10,468 10,405 11,596 Vol. rank

[1=smallest]3 2 1 6 5 4 7



+ 11.5%

over lst

yr

Canadian Lentils – current crop

LentilBalanceSheet2012-13 2013-14 2014-15 F2015-16

Hrvstacres 2,456 2,587 3,152 3,926

Prod'n 1,538 2,142 2,001 2,373Supply 2,244 2,407 2,711 2,701

Exports 1,638 1,757 2,143 2,300C/O 256 700 318 101

stock-useratio 13% 33% 13% 4%


Lentils by Type


LentilBalanceSheet2012-13 2013-14 2014-15 E2015-16

Lrge&Med

Green Sm.Green Reds

Hrvstacres 2,456 2,587 3,152 3,926 760 260 2,906

Prod'n 1,538 2,142 2,001 2,373 450 155 1,768

Supply 2,244 2,407 2,711 2,701 585 200 1,916

Exports 1,638 1,757 2,143 2,300 450 155 1,695

C/O 256 700 318 101 50 28 23

stock-useratio 13% 33% 13% 4% ~11% ~15% ~1.5%

Lentil disposition

MonthlyLENTILExports 2015/'16Rank Country Aug.'15 Sept.'15 Oct.15 Nov.'15 TotalYTD LastYTD

Total World 61,055 353,901 634,996 313,852 1,363,804 827,9801 India 30,689 183,738 328,360 149,080 691,867 277,092

2 Turkey 1,476 85,611 69,520 26,925 183,532 176,7773 Egypt - 19,003 111,915 10,420 141,338 35,593

4 Algeria 3,573 9,796 19,685 12,772 45,826 25,3285 UnitedArabEmirates 1,240 10,023 22,886 35,250 69,399 66,741

6 SriLanka 2,203 6,607 11,844 13,966 34,6207 Pakistan 258 4,889 5,144 14,937 25,228

8 Bangladesh 961 4,173 21,393 8,698 35,2259 Colombia 2,657 3,700 4,730 2,491 13,578

10 Spain 1,195 3,621 5,399 5,460 15,675Other 16,804 22,738 34,120 33,853 107,515


Lentil exports by destination


0

100000

200000

300000

400000

500000

600000

700000

800000

900000

2008 2009 2010 2011 2012 2013 2014 2015 (to Oct.)

'000 m

t

Cdn. Lentil Exports by Destination, 2008-Oct. 2015

India Turkey

UAE Bangladesh

Algeria Pakistan

Egypt Sri Lanka

Colombia United States

Peru Spain

Italy Brazil

Importance of Indian Subcontinent to Cdn. Pulses


IndianSubcontinentPulseImportsfromCanada('000mt)

PeaImports 2011/'12 2012/'13 2013/'14 2014/'15 P'2015/16India 918 1,005 985 1,269 1,179Bangladesh 156 434 186 486 400Pakistan 2 6 27 26 20SriLanka 1 1 1 1 1Ttl.FromCanada 1,077 1,446 1,199 1,782 1,600Est'dttl.PeaImp'sIndia(allorigins) 1,610 1,600 1,600 1,900 1,900

LentilImports 2011/'12 2012/'13 2013/'14 2014/'15 F'2015/16India 170 625 452 648 775Bangladesh 48 91 58 102 250Pakistan 69 31 66 108 85SriLanka 15 50 52 78 25Ttl.FromCanada 302 768 628 936 1135Est'dttl.PeaImp'sIndia(allorigins) 300 600 700 710 850

What is left of current crop lentils?

000mt

15/16lentilsupply 2,701

lentildeliveriesofffarm 1,200~forwardsold/notshipped 750

seedrequirements 350proj'dendingstocks 50

~lentilsleft 351 13%


New crop (‘16/17) lentil estimate - Canada


LentilBalanceSheet2012-13 2013-14 2014-15 F2015-16 P2016-17 %lstyr

Hrvstacres 2,456 2,587 3,152 3,926 4,802 122%

Prod'n 1,538 2,142 2,001 2,373 3,137 132%

Supply 2,244 2,407 2,711 2,701 3,248 120%

Exports 1,638 1,757 2,143 2,300 2,400 104%

C/O 256 700 318 101 523 516%

stock-useratio 13% 33% 13% 4% 19%

International lentil supplies

World Lentil Production Estimate - Selected Major Producers - All Lentil Types

(Historic Comparison)

2009/10 2010/11 2011/12 '2012/13 2013/14 2014/15 E2015/16 P2016/17

Australia 133 306 288 184 246 250 320 200

Canada 1,510 1,910 1,523 1,473 1,886 1,987 2,373 3,237

U.S. 264 393 215 240 198 153 240 315

Turkey 302 500 400 375 305 450 360 450

Syria 135 115 110 100 10 10 10 10

Morocco 25 30 40 20 30 30 35 30

India 700 890 820 700 425 585 750 730

Bangla/ Paki 75 82 93 94 83 80 80 90

Other 600 600 600 600 600 600 600 600

Total 3,744.6 4,825.7 4,089.0 3,786.0 3,783.3 4,145.0 4,768.0 5,662

Vol. rank

[1=smallest]

1 7 4 3 2 5 6 8



+ 18.8% over lst yr;

+51% over 8 yrs.

Importance of Indian Subcontinent to Cdn. Pulses


IndianSubcontinentPulseImportsfromCanada('000mt)

PeaImports 2011/'12 2012/'13 2013/'14 2014/'15 P'2015/16India 918 1,005 985 1,269 1,179Bangladesh 156 434 186 486 400Pakistan 2 6 27 26 20SriLanka 1 1 1 1 1Ttl.FromCanada 1,077 1,446 1,199 1,782 1,600Est'dttl.PeaImp'sIndia(allorigins) 1,610 1,600 1,600 1,900 1,900

LentilImports 2011/'12 2012/'13 2013/'14 2014/'15 F'2015/16India 170 625 452 648 775Bangladesh 48 91 58 102 250Pakistan 69 31 66 108 85SriLanka 15 50 52 78 25Ttl.FromCanada 302 768 628 936 1135Est'dttl.PeaImp'sIndia(allorigins) 300 600 700 710 850

Price

considerations

Example India

- Can we price

ourselves out of the

markets?


Where next - future buyers? Developing countries where

pulses contribute more than 10% of per capita total protein intake


The ME & Africa are

suffering from

drought

Contribution of

pulses relative to

cereals and other

food to total calorie

and protein

consumption in

different regions of

the DW, ROW, and

the world, 2005-07

Source: FAO


Also - Refugee crisis in the ME

• ~ 4.5 million Syrians displaced in camps

• 1 million plus in the EU in 2015 alone …

• Sweden

• F.A. donations (product, not in kind)

• Corruption problems …


Canadian chickpea balance sheet


YTD exports


MonthlyCHICKPEAExports 2015/'16Aug.'15 Sept.'15 Oct.15 Nov.'15 TotalYTD LastYTD

Total World 11,994 6,834 8,212 12,693 39,733 19,0231 UnitedStates 3,732 1,980 2,299 3,570 11,581 5,858

2 Pakistan 3,892 1,760 1,552 4,256 11,460 5223 UnitedArabEmirates 225 689 125 125 1,164 22

4 India 1,928 788 1,785 4,501 3045 Italy 375 384 364 250 1,373

6 UnitedKingdom 388 319 536 161 1,4057 Egypt 100 200 100 230 630

8 Israel 200 200 20 383 8039 TrinidadandTobago 51 176 77 184 488

10 Chile 25 125 124 274Other 1,077 213 1,230 3,534 6,054

Comments from Australia about desi mkt.:

• Over 850k mt of their desi chickpeas have already been shipped to the Indian

Subcontinent (primarily India) from Oct. ’15 through Jan. ’16

• Stocks should run out well before new crop harvest next fall

• Australia definitely expects significant increases in chickpea acreage for 2016,

but rotation and land suitability will be a problem.

• Australia had 650-700k ha of chickpeas last year, generating a crop of 1

million mt chickpeas (+). Traders say that a 1.5 million mt crop is possible with

decent yields, but as always in Australia, weather may play a major role.


Fababean numbers

Canada - Fababean Balance Sheet (mt, acres)

Year 2010 2011 2012 2013 2014 2015 F2016

Acreage 4,100 4,300 5,600 15,200 75,000 125,000 143,750 plus 15%

Yield (pounds) 2,420 2,922 2,716 3,249 3,160 2,456 2,900 5yr.avg.

Production (MT) 4,500 5,700 6,900 22,400 107,500 139,254 188,920

Imports 584 360 824 16,094 8,559 5,000 2,000

Carryin 1,300 500 750 1,000 1,000 18,000 14,055

Stocks 6,385 6,560 8,474 39,494 117,059 162,255 204,975

Disappearance

Export 2,620 2,444 2,473 9,536 23,623 55,700 70,000

Seed & Waste 592 752 1,680 7,305 13,336 19,000 21,000

Domestic 2,673 2,614 3,321 21,654 60,099 73,500 88,500

Usage 5,885 5,810 7,474 38,494 97,058 148,200 179,500

Carryover 500 750 1,000 1,000 20,000 14,055 25,475

Usage/Stocks 8.50% 12.90% 13.40% 2.60% 20.60% 9.40% 14.2%


Faba beans - World

Prod’n est.

World Fababean Production Est.

('000 mt) "Avg." 2013/14 2014/15 2015/16

China 1,700 1,750 1,830 1,830

Ethiopia 585 580 580 580

Australia 275 328 284 410

France 330 306 320 335

U.K. 120 105 125 140

Egypt 230 160 160 160

Sudan 145 145 145 145

Canada 22 108 111

Total 3,385 3,396 3,552 3,711

Exporters


UK 23%

France 36%

Australia 34%

Canada 2%

Others 5%

Global Fababean Exports-Est'd Mkt. Shares

Comments from Australia about faba mkt.:

• Prices for Faba beans have seen a healthy rally over the past few months.

• Crop was smaller than expected with some very poor yields especially in

Victoria. At the same time, Egypt has been buying its usual quantities from

Australia in spite of the higher prices (+ US$100–150/mt), rather than poorer

quality beans out of Eastern Europe, the UK and France.

• We expect Egypt to take close to ‘the usual’ 200,000mt from Australia, which

will be most of the Australian crop. Australia should have a low carryout this

year again

• Egyptian buyers they are restricted on the amount of US$ the bank will give

them; therefore bulk shipments to Egypt are expected to be down; they only

seem to be able to buy small quantities at a time,.


Which crops to grow? 2016 Return per Acre Scenario-Total costs


$30.50

$73.00

-$28.00

$107.50

$43.50

$28.50

$35.50

$146.25

$21.75

-$25.50

-$2.25

$291.50

$390.50

$67.25

$183.50

$47.00

-$50.00 $- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00

Winter Wheat

Durum

Hard Red

Malt Bly

Feed Bly

Canola

Specialty Canola

Yellow Peas

Green Peas

Flax

Oats

Lentils-Red

Lentils-Lrge.Grn.

Kab. Chickpeas

Mstdsd

Canaryseed

Margin per crop per acre over Total Costs, P2016 (on deferred futures & cash values)

To keep perspective of where things are…

Exchange Rate Effects - Canandian Price Parities

Price per

pound

Current

Exchange

Exchange

year ago

Current red lentil price $53.00 0.7094

Parity Year ago $41.78 0.9000

per bushel

Current pea price $13.00 0.7094


per tonne

Current canola price $474.00 0.7094


Canadian Grower Prices (Cdn.$)Jan. 2015 Jan. 2016 Change

# 2 o/b Yellow Peas ($/bu) $8.15 $12.50 153%

# 2 o/b Green Peas $9.25 $9.00 97%

# 2 Large Green Lentils ($/cwt)$35.00 $71.00 203%

# 2 Small Green Lentils $26.00 $55.00 212%

#2 o/b Red Lentils $30.00 $58.00 193%

# 2 o/b Yellow Peas ($/bu) n/a $10.50

# 2 o/b Green Peas n/a $8.50

# 2 Large Green Lentils ($/cwt)$22.00 $42.00 191%

# 2 Small Green Lentils $19.00 $38.00 200%

#2 o/b Red Lentils $24.00 $36.00 150%

N/C crop, S/O/N delivery

Current Crop Crop, J/F delivery


Sales/ CT considerations

Price

• Do not aim to hit top price; deliberate ROI, not price • Who sold $18/bu canola?

• Importance of covering cash flow well ahead of time: > reduces prod’n risk

Contracts

• Consider selling volume vs. percent expected production

• Overproduction: Try for option to sell to CT holder at ‘competitive market

price’ (not first right of refusal)

• Carrying charges: Try to incl. in CT terms

• Timing: While contracting Co. is eager for more volume, that is the time to fix:

volume (vs. %), overproduction option/terms, carrying charges


New crop marketing

• The strong new crop prices show that good demand is anticipated into next

summer and fall.

• Company perspective: Push contract acres by offering good prices for only the

first 30% of the production. This creates a good surplus to be bought by the

Co’s at potentially better prices later.

• Farmers’ perspective: Sell enough tonnage per acre to cover the COP!

• Sell a specific tonnage as opposed to lbs/ acre and then cover some of the production risk

via crop insurance or other risk insurance.

• The more acres are being seeded, the bigger the potential price drop could be in the spring


Conclusions

• Cycle: India is the major demand driver and may have trouble again with the

next crop (but ‘not guaranteed’). Mercantile expects lentils & peas to remain

firm towards the end of 2016.

• Production: Watch for size of acreage response to strong price signals lentils/

peas in Canada and abroad

• Rel. size crops: With special crops, ‘relatively small’ swings in acreage can spoil

prices

• Mkts.: Consider currency factor - ability of markets to buy

• Mktg.: Ensure to fix profitable options when available

• Avoid production/ marketing mistakes; they will be harder to recover than in recent years

• Watch CT terms when product is in demand


Factors to watch


• Markets change, so you or someone needs to keep on top of the changes

• 2015/’16 crop year: Lentils & peas will be sold out

• 2016/’17 crop year: Watch total acres seeded and acreage allocation between crops

www.mercantileventure.com

pulse outlook 2015/16 & 16/17 · ragi 1500 1550 1650 106% a r h ar (pi g eo n pea) 4300 4350...

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