Be patient in current pulse market

Canadian pea and lentil area will decline for 2018, a trend strengthened last week in the United States Department of Agriculture acreage projections, forecasting farmers intend to plant 28 per cent fewer lentils and 20 per cent fewer peas in 2018.

Heavy global supplies and weak prices make both crops less attractive options for growers in the aftermath of this winter's move by India to impose significant import tariffs to slow the inflow into that country - the world’s largest producer, consumer and importer of pulses.

The market situation there is not about to rectify anytime soon, unless a significant crop threat emerges.

Updated production estimates from the Indian government suggest record large pulse production of near 24 million tonnes this year, exacerbating the current supply over demand imbalance. As such, any pulse commodity will be subject to random changes to the Indian government import tariffs. This means shallow trade. When that occurs, actions are taken to satisfy only short-term needs.

Regained strength

However, worldwide consumption of pulses in its various forms is not slowing down. In fact, if anything, it is accelerating. And the ultimate health of the pulse sector, which remains challenged at the moment, will regain strength in the years ahead.

What we may witness in the intermediate is a shifting of the demand matrix, moving perhaps from a near exclusive dependence on India as the primary buyer of Canadian pulses to a demand marketplace becoming more diversified, with domestic consumption and processing playing a much greater role. Think of something akin to how Canada’s canola market has developed.

India is making a concerted effort to become self-sufficient in pulse crop production, and while unpredictable weather will likely mean the country will still need to buy from Canada regularly, that buying simply can't be relied on any longer.

Instead, the future may now be domestic processing.

Canadian opportunities

According to a Canada West Foundation report released late last year, an immense opportunity is being presented by the multi-billion-dollar plant ingredient market. The report makes the case that the Canadian Prairies has what it takes to become the dominate global player as the world increasingly looks for green and sustainable sources of protein.

Since the Prairies are already a major producer of crops like lentils, peas, beans and faba beans, the plant protein market seems like a natural fit. A number of new food processing projects announced for Western Canada over the past year strengths this opportunity.

But without a crop threat somewhere, there is likely no quick fix for depressed market conditions prevailing today.