Lentils

Global lentil markets spent the back half of 2022 transitioning from dealing with a supply deficit to abundant supplies. Canada bounced back from a poor season in 2021 to produce 20% more than the long-term average in what was a very good crop. Combined with above-average production in Australia, global lentil ending stocks are estimated to increase by roughly 1MMT in 2023. According to ABARES, 22/23 Australian lentil production is likely to exceed last season’s record by 65kt, to 924kt which is almost double the 10-year average for Australia albeit with some loss of production in some areas of VIC. Australia also shipped an average of just shy of 100kt per month during the 2021/22 marketing year, with India and Bangladesh responsible for taking 18% and 41% of exports respectively. Back in July, the Indian Government announced it would extend the zero-tariff allowance on Australian lentils until 31^st March 2023. However, as Canada is also not subject to a tariff, it is unlikely to make any meaningful difference to our competitiveness vs Canadian lentils in the short term.

Looking ahead, harvest pressure is likely for domestic lentil markets, regardless of global factors. The sheer volume of lentils hitting the market will push buyers to incentivise growers to hold lentils, until such time that global demand returns meaningfully for our product. Although issues around container availability and rates are easing, any price spikes will be attributed to filling a bulk export ship and hence should be monitored and considered as viable sales opportunities. The next point on the calendar that could provide some volatility in the market is March/April, as India’s Rabi crop is harvested, and our crop is planted. Any upsets to production have the potential to provide opportunities for Australian lentil pricing but the oversupply in the market will dampen the impact until existing stocks are reduced. It is therefore expected that the price highs of the last 12 months (above $1000/t) will not be easily achieved in 2023.

Chickpeas

According to ABARES, 22/23 Australian chickpea production is likely to fall short of last season’s second largest crop on record of 1.062Mt, with the coming crop estimated at 621kt, compared to the 10-year average of 825kt. Australia shipped an average of 55kt per month across the 2021/22 marketing year with Bangladesh responsible for 60% of those exports, with Nepal and Pakistan the next biggest destinations. On the demand side, Pakistan is the one to watch this year as their traditional sources of Kabuli chickpeas in Russia and the Black Sea region have become at risk.

Faba Beans

The outlook for faba beans is mixed. On a positive note, last year Australia produced the second largest ever crop of faba beans, according to ABARES, coming in at 582kt vs the 10-year average of 400kt. Estimates this year are for another above-average crop at 465kt, while private estimates have this closer to 700kt. The trade has reported anecdotally that carry-over stocks for faba beans have been considerable this season, with even domestic feed markets struggling to take up the slack. However, as new crop hits the bin this season the discount to old crop is likely to be wide.

Globally, Egypt has been a steady buyer of Australian faba beans, accounting for 75-80% of exports this season. It has been reported that domestic end users in Egypt over-bought stock this year, resulting in oversupply within Egypt that has left importers standing aside from the market in the short term. Egypt has also been hard hit with higher import prices for essentials such as wheat and energy this year making it harder to obtain USD to pay for any additional imports. Further, Egypt will be inundated with Baltic stock soon as their harvest begins, not leaving much room for Australian faba beans on the global market in the short to medium term.

Editor: Tess Walch, Senior Commodity Adviser, Market Check