Dealing with Drought/
An Outlook on 2021 U.S. Pulse Exports to Colombia and Peru

How are things looking for your crops?

Not great! The weather in North Dakota and Montana has been very dry. For this year’s harvest, we are expecting a yield of about 50-75% of previous years. We did a small poll on our twitter and talked to our farmers and they were backing up those numbers. It’s been way too dry. The drought has been going on for the last 2 months at least and 88% of Montana is abnormally dry. Overall, we think this year's crop is going to be smaller than previous years. At least across lentils and peas; for chickpeas I’m not so sure. Also, there’s no significant carryover from previous years, which has been a constant for the past couple of years. That’s going to have an impact on the market - we think there’s going to be an increase in the growers’ prices. There’s no way around it: the demand is sustained but the product isn’t there. On the buying side, a lot of buyers are already covered but I think some producers are going to have a hard time covering contracts.

Let’s talk about chickpeas.

Most of our chickpeas are exported to Colombia; as of 2020 the US has a 12% market share in chickpeas there. In 2019, the US had 18% of the market share and in 2021 it was 29%. The size of the chickpea market in Colombia in 2020 was $11.5m, a lot less than the lentil market. Colombia is a bigger consumer of lentils and peas than of chickpeas. (Round numbers taken from the DANE Colombia). 

There has been a shortage of chickpeas and it’s hard to find larger caliber chickpeas, especially 9-millimeter varieties. The price went up as they were in high demand and now there’s not a lot of them around, so we think there’s going to be some demand there. In general, in the US there was a huge production drop of chickpeas in 2020, which has affected the current chickpea stocks and there could be some tighter suppliers as we don’t have any carryover at this point. As far as I know, it’s a similar situation in Mexico and Argentina. 

Is there anything you think our readers should know about the chickpea market?

I would say just keeping an eye on Mexico and Argentina. Argentina has been gaining market share in Colombia over the last few years: 32% in 2019, 50% in 2020, 22% in 2021.

Also, I think there will be high demand for 9mm chickpeas. Sierras also tend to be in high demand, they have been for the past 3 years, and they take between $60 and $120 per MT. 

What about lentils?

Normally the lentil crop comes out in August and we start shipping in late August/early September but I don’t know if this year that’s going to be possible with the shortage of containers. It’s difficult to confirm bookings without getting any rollover. If that doesn’t happen, we’ll go ahead with our normal shipping period. But I’ve been talking to our producers and they’re all going through the same thing with the drought. There’s not a lot of carryover from previous years and some farmers are thinking about not selling what’s left from the 2020 crop so they can use it as seed for 2022.

Any idea what the export prices will look like considering the drought and the shortage?

At this point, I would say that we wouldn’t want to be offering up any ideas for prices - we wouldn’t want to take any risks. We didn’t take any position before the drought became an imminent threat and we wouldn’t want to take any positions now. I think it’s going to be hard to get farmers to sell to you... at this point most of those farmers already have contracts for new crop and they are keeping their older lentils for seed so some of them might be concerned about how they are going to cover all of their contracts. That’s why I wouldn't give you any prices right now but what I would say is that they’re going up. That’s the only thing that makes sense - anything else and I would be very surprised.

Canada has a strong grip on the red lentil market, will that affect JM Grain this year?

I don’t think so, we are talking about giants there. Some of those deals are whole vessels. That’s a different market from us.

Let’s talk about peas.

The drought has been the same; we’re having similar issues as with lentils and chickpeas. The yields are not looking great. Like with lentils, growers are reluctant to sell their older crop. If there are any spare peas to be found, some growers want to keep them for seed for new crop and these are smaller amounts. I'm talking farmers with 2000 bushels, just whatever's left for the season.

As for demand, I don’t know if there will be the same demand as for lentils. We produce green peas, yellow peas, wholes and splits. Our splits go mainly to Peru, our wholes go mainly to Colombia - the size of the pea market there was 21 million dollars in 2020 but peas are historically cheaper.

We also do a lot of domestic deals with peas. The ratio is mostly domestic, not just for consumption but also government tenders, either on the export government tenders or domestic government tenders.

You’re speaking at the GPC Ask the Experts South America’s Colombia Panel, how is preparation going?

It’s taking me a while! I’m trying to view it from the perspective of the listener to make sure it’s as interesting as possible. I've been collecting a lot of data to give people an idea of how this market works. I'll try to cover everything from country of origin, prices, price tendencies to what’s going on in the domestic market. For example, Colombia had a huge strike and there are issues with law and order because of a social movement that’s happening here which started back in November 2019. It got shut down because of Covid but it started to pick up again in April 2021. They had Buenaventura, one of the biggest ports in Colombia, shut down for about 2 months and that took a toll on all the importers logistically, so we’re going to see a rise in prices domestically. I’ll also do an analysis of price based on when it was imported and country of origin and finally the price of the domestic market and how it’s moving: we have a variation over 25% in 3 months in some products so I think whoever is interested can find value in some of this information.

Do you have any advice for facing a challenge such as the drought of this year?

The best way to face this challenge is working closely with the farmers as they’re the closest ones to the actual product. From a buyer perspective, I’d say keep your ear to the ground. I’ve talked to my buyers and some of them are already covered until the end of the year, some are waiting but most are taking preventive positions, which I think is good. I told some of them that I really think they should look out for what’s coming this year because it’s happened in the past that the price of lentils goes up and I think that could happen on the peas.

Personally, I expect that, for most of the countries in Latin America, the Canadian market share for export is going to grow vs the US market share, based on what I’ve been hearing. One more thing, I would recommend exporters and buyers to be on the lookout for India’s tariffs because if they drop the tariffs on lentils, it could have an impact on current demand.