Global market of pulses: a way to recovery – Agropa Trading




The COVID-19 pandemic, high price volatility, the economic crisis, unstable weather and climatic conditions, all these and many other factors continue to keep the pulses market operators on their toes even at the turn of the seasons.

Will India be the main price-driver in 2021/22 MY? Should top exporters expect tougher competition on the world market? How will the price situation develop, and should operators expect an improvement in the trading climate and a recovery in demand? We talked about this and not only with Denis Plenkin, CEO of Agropa Trading.

- Denis, summing up the results of 2020/21 MY, how can you characterize the situation on the global pulses market? What key trends and challenges in the outgoing season can you highlight?

- I think it is logical to start with the last global event - the pandemic. I can say for sure that the coronavirus has negatively affected the consumption of pulses. However, in defense of pulses, we can also note a decrease in the consumption of meat, poultry and fish.

I have to mention the growth in freight costs. For example, the freight rate for a 20-foot container from the port of Novorossiysk to the port of Karachi (Pakistan is one of the main buyers of Black Sea pulses) with dispatch in July 2020 was at 1800 USD/t. In July 2021, it amounted to 2500-2700 USD/t, i.e. the cost of freight increased by 44% in one year.

- Market operators continue to monitor closely the weather and climatic conditions, which are extremely volatile. What are your forecasts of the production and quality of the main pulses in the Black Sea countries?

- In Russia, we see a gradual increase in acreage and the yield of peas. Over the past three seasons, the production has increased by 19% and amounted to 2.7 mln tonnes in 2020. This year, UkrAgroConsult expects the production to reach of 2.9 mln tonnes. However, APK-Inform predicts a decline of the crop to 2.5 mln tonnes.

On the contrary, Ukraine reduced the sown area and production in 2020 compared to 2019 (470 thsd tonnes versus 570 thsd tonnes). However, UkrAgroConsult forecasts the production to grow to 550-560 thsd tonnes, although the experts of APK-Inform expect peas crop at 485 thsd tonnes.

The situation is somewhat different for chickpeas. We see a reduction in acreage and harvest in Russia, starting from 620 thsd tonnes in 2018 to 290 thsd tonnes in 2020 caused by a drop in prices for chickpeas from a peak of 1100-1200 USD/t in 2017. However, the chickpeas harvest is projected at 350 thsd tonnes in 2021 due to the growing prices on the world market.

We see the same situation in Ukraine. The production totaled 480 thsd tonnes in 2020/21 MY, the forecast for 2021/22 MY is 560-570 thsd tonnes.

The production of lentils declined from 195 thsd tonnes in 2018 to 116 thsd tonnes in 2020 in Russia. The crop will reach 120 thsd tonnes in 2021. Ukraine is virtually absent from the world market with a harvest of 3 thsd tonnes in 2020.

At this stage, we do not expect a deterioration of the crop prospects in the Black Sea region due to weather conditions. So far, the most negative thing that we see is a delay of the mass harvesting for a couple of weeks.

- What can you say about the competition between Ukraine and Russia in the current season on the key peas markets, in particular from the point of view of price dynamics?

- I cannot say that Ukraine and Russia are competing on the export market of peas, since the geography of sales is different. Moreover, there is a significant difference in the volume of exports. Russia shipped 600 thsd tonnes of peas over an incomplete season-2020/21, and Ukraine exported 320 thsd tonnes (i.e. almost 2 times less). The average price of Ukrainian peas is higher than the price of Russian peas by 7-15 USD/t with similar delivery terms (depending on the direction and market conditions).