Pulse market strength to continue but credit risk a concern

AGT Foods' senior traders Mitchell Elks and David Lever told the crowd at the Southern Pulse Agronomy field day last month in Victoria's Wimmera that global demand for Australian pulses would continue to be strong.

In particular the rosy story for lentil producers continues, with a strong production year across the crop's heartland in South Australia and Victoria coinciding with poor Indian and Canadian seasons.

"We have been working our way through the old crop lentils at a good pace and with the new crop now starting to come online we're expecting good demand there as well," Mr Elks said.

It is good news for the Australian lentil industry which has enjoyed a big increase in total production.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimated the 2022-23 crop at a record 1.7 million tonnes, with some private estimates higher than that and there are are opinions that this year's crop will go close to 2m tonnes on the back of larger planting and reasonable seasonal conditions, although late frosts may stymy yield potential somewhat.

Mr Elk said there were no shortage of willing buyers of Australian lentils, with India leading the way.

This has led to strong prices this year, with values hitting the $1000 a tonne mark at times and consistent pricing between $800 and 1000/t.

The strong export demand has stopped the price falls that have previously hit the industry in years of high production.

And Mr Elks said he was confident Australia's pulse exporters could continue to send the big volumes of lentils out into the medium term.

"The demand story looks set to continue to be strong which is a great reassurance for those looking to either get into lentils or plant more of them."

However, Mr Lever said while India, which dropped tariffs on Australian lentils in April last year, was a good news story he said the credit crunch in other key lentil markets such as Sri Lanka and Pakistan was having an impact.

"Importers are having real difficulties getting finance which is making it difficult, so while the demand is there exporters have some issues which is making it difficult."

Mr Lever it was a similar situation in the faba bean sector, with Egypt, traditionally Australia's largest international buyer of fabas, which is also suffering through a credit crisis that has sent inflation soaring.

"There are some complexities in some key markets across the entire pulse sector," he said.

Mr Elks said Australia's chickpea crop, centred on northern NSW and southern Queensland, which are enduring a dry season, was likely to be well below average, creating solid interest for those that did manage to grow a crop.

Faba beans, while less spectacular than lentils, will likely be higher in value than last year, with markedly less planted through medium rainfall zones in the Wimmera due to high levels of disease and low yield last year.