India's Economy in a Tailspin

[errolanderson]

Group . . . Believe we should all be aware of what is happening to India's economy. It appears heading for a hard-landing recession. Apparently, India's growth rate has been revised lower to 6.7 percent. But they need an 8 percent growth rate to keep up with the added 12 million entering the workforce annually.

India is our major buyer of pulses . . . . This is a situation markets will keep an eye on.

[iceman]

Well that may explain what's happening in the lentil market these days

Iceman

[dave4441]

Well that may explain what's happening in the lentil market these days

Iceman

Heavy stocks in India of red lentils (both due to larger domestic crop of most pulses and imports greater then consumption) combined with Australian competition is really reason for the slump in red demand. If they have a decent crop in Feb/march today's price will look high.

Add in a recession and it could be pretty bleak. Like 2005 bleak.

[farmaholic]

And yellow peas?

Not as many green pea and lentils in the first place?

[furrowtickler]

If that's the case , seeding plans are changing here . Not doing something for nothing .

[Rareearth]

Ironic
Indian government manages prices, importers price gouging, imports, fumigation, taxation, etc to lower the incoming cost of pulses, as they are masters of manipulation as free market can't manage supply - demand needs.

Now they have normal or big crops, cheap imports due to large crops in foreign countries (Canada, Australia, domestic, Africa, Argentina, Russia, etc) large stock piles, and cheap domestic pricing. Now for the ironic part, govnt did every thing in their power to manipulate and depress the pulse prices. Today they have large stock piles, prices are low, so low that the government would rather the stock piles go bad, than feed the 12,000,000 new births per year, it's their economic stimulus, growth engine, etc

[dave4441]

If that's the case , seeding plans are changing here . Not doing something for nothing .

Yes, we need a big drop in Canadian lentil acreage. And hope our competitors also pull back. We are into a new era.

Yellow peas have dropped due to competitive pricing coming from Russia/Ukraine. Around $6/bu reflected to Canadian grower. Not alot is being shipped from Canada. Lentils and peas in general is 100% shift from big demand of last season.

Green peas should bounce higher as there is less 2017 acreage, and price for greens is $1/bushel higher then yellows but it is still at a price that is perceived as not high because we have been spoiled by India in a wave of demand. Rising tide lifts all boats. Suspect yellow pea gets down to $7/bushel while green peas rises to $10 sometime this winter. Alot of bleach in new crop green peas. Much higher then normal. Pea production in Canada is 4 MMT overall and we don't have as much sold as normal.

Green lentil demand is down by a third potential this year because India will import zero green lentils this year. Zero. Green lentil are not down, they are up over last year and while the acreage is up, yields are down in some areas. Still a average lentil crop is about 1300 lbs and we are definitely there. Traditional demand isn't going to make this market hum. India, when a buyer, could take our entire green lentil crop if they wanted to. No threat of them at all so it's a different dynamic. Small green lentils have a even smaller export potential without India and we are down to traditional buyers who don't need to buy our whole crop in August. As prices are creeping lower in green lentils our asking prices are dropping and the buyers are less interested in buying any. Just like falling fertilizer prices. We wait to find a bottom. Small greens will need to get to 30 cents before traditional importers come to the table for any significant volume.

Indian demand was too strong for too long and we pushed prices to the moon. Reaction was every pulse farmer in world Rose to meet this demand. All at once. Pigeon peas from Africa, reds from Australia. Peas from Russia/Ukraine/Baltics. Kzackstan selling reds into turkey today. Russia offering greens into Colombia. My LinkedIn account is covered with traders from different origins trying to push our traditional pulse products from these different origins to our customers.

I can't emphasis this enough. We are selling into a much different demand environment and markets will react to the upside in pennies and to the downside in nickels.

[farming101]

The cure for high prices is high prices

[Rareearth]

And as soon as corn, soy and wheat markets reduce global stocks, and pricing rebounds, the first time pulse growers will revert back to those crops that they are most familiar with?

9 billion people by 2050?

[dave4441]

And as soon as corn, soy and wheat markets reduce global stocks, and pricing rebounds, the first time pulse growers will revert back to those crops that they are most familiar with?

9 billion people by 2050?

I farm too so I would hope so. But not so sure as many growers are recognizing what a pulse crop does in rotation. I know I can push some acres away from them but can't remove from our farm.

Prices will go back up but it won't be this winter/spring. Red lentils will likely have a million MT carryout this July 31, 2018. It was 50000 Mt 14 months ago.

[farming101]

Always darkest just before the dawn?
[URL="http://www.reuters.com/article/us-grains-supply-special-report/special-report-drowning-in-grain-how-big-ag-sowed-seeds-of-a-profit-slashing-glut-idUSKCN1C21AR"]http://www.reuters.com/article/us-grains-supply-special-report/special-report-drowning-in-grain-how-big-ag-sowed-seeds-of-a-profit-slashing-glut-idUSKCN1C21AR[/URL]

[furrowtickler]

Good to know about the Bleach issue in greens .
Ours are 2% or less , so they will stay in the bin .
We will be splitting our pea acres in half , the other half will be Soybeans . This keep our pulse acres at par with our ten year average.
Yes pulses can be good for the rotation but we still need to make money .
Can't grow crops for free just to feel good

[dave4441]

Good to know about the Bleach issue in greens .
Ours are 2% or less , so they will stay in the bin .
We will be splitting our pea acres in half , the other half will be Soybeans . This keep our pulse acres at par with our ten year average.
Yes pulses can be good for the rotation but we still need to make money .
Can't grow crops for free just to feel good

I think by spring you will be happy you had the green peas in this year and likely it will be a winner for your farm in 2017 if your yield was decent. Saying that it feels hard to see a $10 green pea as spread will get there vis-s-vie a yellow pea. Different markets but we really need india to buy greens to see decent values and i am suspect that happens.

The bigger issue is that all crops look to be down in value by spring. So becomes a game of picking what crop looks the best on ones farm and has market potential. People are also going to have to watch their costs. Some of our competitors have real cheap currency and i see a more difficult period ahead of us. We hadnt needed to worry too much about that when we didn't have competition. I also hear land agents are getting lots of calls. We are going to shift a bit likely.

Saying that, alot can happen in a year. Just people need to be aware of the head winds in front of us. Today the info is terribly bearish. Bearish info builds over time. Bullish details come out of nowhere.

[ajl]

I think the bigger impact was from the Indian Government screwing around with the currency. They are trying to push towards cashless to eliminate tax cheating (sound familiar) and so they screwed the poor who were improving their diets. Off course there is much greater corruption at senior government levels. Anyways this also disrupts the pulse market. Growing surpluses of food stuffs around the world and tightening monetary policy, which was necessary and highly overdue. The 80's called. There are coming back to visit.