Concerns that India would no longer accept Canadian peas and lentils due to changes to fumigation requirements on incoming shipments were overblown, says the president of LeftField Commodity Research.
India issued a three month extension last week, allowing sales to Canada’s largest pulse export market to continue.
“In the end it turns out there was a lot more smoke than fire,” says Chuck Penner, in the interview below.
While some buyers in Western Canada withdrew their bids due to the uncertainty, Penner says Canadian Grain Commission data on farmer deliveries, exports, and movement from country elevators shows the perceived risk did not have a significant impact on the market. In fact, “movement of red lentils and yellow peas has really picked up in the last few weeks as opposed to dropping off.”
Grain companies and traders were publicly optimistic that the export dilemma would be resolved leading up to the March 31st deadline. They may have been calling the Indian government’s bluff, but Penner says some traders also had arrangements in place to have pulses fumigated at other ports.
As for the June 30th deadline that now exists, he’s not concerned, and certainly doesn’t think growers should let it heavily influence their seeding plans.
“I’m really not all that worried about a new ban,” says Penner, noting the Indian government’s incentive to implement a fumigation-related ban to influence domestic production will be diminished.
“Even if another fumigation ban comes up, the trade will figure out a way to work through it. It might be at a slightly higher cost, but they’ll still figure out a way to keep those pulses moving,” he says.
More worrisome than the fumigation policy change was the potential for an import duty, notes Penner, as there were rumours India would implement a 25 percent duty on peas or lentils. It appears those concerns have also blown over, he says, as a 10 percent duty was announced last week for another pulse crop known as pigeon peas, but peas and lentils were not affected.
Penner shared his insight on the Indian pulse export market on RealAg Radio on Tuesday: