Australia: India’s tariff talk throttles sales

Sales to Australia’s major pulse market have slowed on fears the Indian Government will lift tariffs on chickpeas and lentils, and on thin selling from growers.

While the desi chickpea and northern faba bean harvest is all but over, cool and wet weather has slowed progress on the lentil and southern faba bean harvest.

This has held back harvest pressure from markets as growers with late crops worry about quality and timing, and growers remain underwhelmed by prices on offer.

Chickpeas are trading at around $640/t delivered Brisbane for bulk export, up $40/t from prices quoted six weeks ago.

In comparison to last harvest’s breakneck shipping pace, bulk exports are slow out of Brisbane, and appear to be relying on those who can load their own boats.

“The Australian traders that lost a lot of money last year aren’t there this year,” one trader said.

“The bulk guys are dominating the market.”

While quality of new-crop desi chickpeas is good thanks to mostly favourable harvest weather, price uncertainty is rife, based on the expectation that the Indian Government will lift its tariff on chickpeas from 10 percent at present to 30pc this month.

“The chickpea market is in a bit of a fluid state; people are waiting for India to put the import duties up,” Mandala Trading director Umang Bagaria said.

“The Indian market has a good crop coming along, and the local market is not sustaining prices.

“The Indian market also knows that Australian production is massive.”

Unistar Grains director Sanjiv Dubey said India’s domestic market for chickpeas has already fallen below the government’s Minimum Support Price, and rumours of a tariff hike were therefore likely to be true.

“This is why none of the exporters want to do anything…and nor do importers,” Mr Dubey said.

“The whole thing is about prices in India.”

India will start harvesting its rabi crop in February, and a tariff hike is expected well ahead of that to take pressure off the domestic market.

“They have no option but to put it on,” Mr Dubey said.

Estimates for all Australian winter pulses, chickpeas included, are due to be updated in ABARES’ quarterly Australian Crop Report due out tomorrow.

ABARES’ current estimate is for a 2.1-million-tonne crop, down from the record 2.3Mt harvest last year, when Australian growers were enthusiastic sellers at $900-$1000/t or more delivered port to catch India’s tariff-free window.

Mr Bagaria said this year was the “complete opposite”, and growers are known to be holding their chickpeas on farm, or warehousing them, rather than further depressing the market.

Ahead of Ramadan in February, Bangladesh has been a volume buyer of new-crop chickpeas, and Pakistan has also been dipping into the bulk market.

“Bangladesh has been a lot more stable because Ramadan comes early, in February.

“Bangladesh gave the early rise to chickpeas, but Bangladesh has slowed down as well.”

The Middle East and Nepal have provided some supplementary demand through the containerised market, which is trading at around $575/t delivered Downs and $650/t DCT, down from close to $680/t last week.

The faba bean crop in southern Qld and central and northern NSW has been harvested and trade sources say the first cargo for the season is due to start loading this week in Brisbane.

Northern beans are said to be trading at around $420/t delivered port for bulk export to Egypt, which is seen as well supplied, but willing to extend coverage in the currently depressed market.

“What I hear from brokers is there is plenty of stock sitting in Egypt,” one trader said.

In the southern market, faba beans are quoted at $440/t delivered, not high enough to inspire much selling interest from growers who are happy to hold with the idea of value adding through their own livestock.

Given their more limited options for domestic sale or on-farm use, northern growers are seen as more willing sellers.

In Victoria, Reid Stockfeeds commodity manager Justin Fay said the massive turnaround in the season for graziers, who battled drought into the winter just gone, has seen demand fall away for faba beans.

“There’s feed in paddocks everywhere,” Mr Fay said.

“It’s quite incredible how lush things are looking; it’s a major transformation from where we were earlier in the year.”

While faba beans are available at around $450/t delivered site, Mr Fay said lupins were a more attractive option for cracking through the hammermill.

“We’re picking up lupins at around $540; they work better for us.

“We’re not going to include fabas; we’re switching wholly to lupins, even though they might be $100 more.”

According to Digital Agri Services data, Australia’s faba bean harvest was 35pc complete late last month, with Qld at 89pc, NSW 70pc, Western Australia at 24pc, and South Australia and Victoria at only 2pc.

A slow start to the lentil harvest in SA and Vic rather than any surge in export demand has lifted the market for the little pulse in the past week.

Lentils delivered bulk to Portland and Melbourne in Vic are currently trading at around $640/t, up from around $585/t in mid-October, but well below the $880-$900/t on offer at this time last year.

In the up-country market, lentils are fetching around $600-$610/t delivered Wimmera packer, with both the bulk and boxed market trading at above export parity, but in limited volume.

Prices being well below where they were this time last year, and prolonged cool and wet conditions in SA and Vic, are behind the trickle of grower selling.

“Harvest down here is progressing pretty slowly,” ETG’s Horsham-based pulse trader Todd Krahe said.

“When we started harvest, we were generally 10 days late; now we’d be more like three weeks late.”

Forward and off-the-header sales of lentils have been very slow based on both the low price and the slow pace of harvest to date.

Digital Agri Services late last month put the national lentil harvest at 40pc complete, with the major producers SA and Vic at 46pc and 31pc respectively.

“I think the shorts that have been there…have basically been covered.”

Mr Krahe said less than 10pc of what was being harvested was coming to market, with growers either storing on farm, or warehousing.

Volume on offer from growers is enough to cover demand from India and other markets, with Australia currently the go-to supplier.

“We’re roughly in line with Canada; they’re not overly active right now, and they’re happy to see our prices haven’t completely collapsed.”

Given large crops in Canada as well as Australia, Mr Krahe said all destinations were buying hand to mouth because further price pressure can be expected if the Indian Government ups its tariff.

Currently at 10pc, the tariff is expected to go to 20pc, and possibly 30pc if India’s own rabi crop is a big one and the Indian Government want to further protect domestic prices.

The tariff hike was expected late last month, and its announcement is now rumoured to occur this weekend.

Under the Australia-India Economic Cooperation and Trade Agreement, Australian lentils are subject to a half tariff on 150,000t per annum, each quarter with 37,500t apportioned.

Mr Bagaria said lentils are generally eaten more frequently in Indian diets than chickpeas, and therefore trade in a more liquid market.

“Lentils are a profitable product for traders.

“Chickpeas have a big substitute in a yellow peas; lentils do not have a substitute.”

Pinion Advisory Horsham-based broker Andy Brown said growers were juggling harvest options in cool and damp conditions, and swapping out of barley in the challenging conditions.

Malting barley generally needs to be 12.5pc maximum, and feed barley 13.5pc.

“At 14pc moisture allowed, some growers are flicking to lentils with these cold days,” Mr Brown said.

Tags: Market, faba bean, pulse, lentils, tariffs, Australia, harvest, India, chickpeas