Pulse Crop Outlook

February 2018

Presented by:

Chuck Penner

@leftfieldcr

PULSE MARKET OUTLOOK

Global pulse environment

What’s the Indian situation?

How bad is it?

Market outlooks

Peas

Lentils

Fababeans

Soybeans

1

INDIAN PULSE CONSUMPTION

2

These years were the “setup”

PRICES RESPONDED

3

50 cent red lentils & $14 yellow peas

AND FARMERS RESPONDED

4

Appropriate response to high pea prices

US PULSE PRODUCTION

5

Large response for all three pulses

AUSTRALIAN PULSE PRODUCTION

6

Good weather and more acres

EU-28 PEA PRODUCTION

7

Eastern Europe & Baltic countries show most growth

OTHER RESPONSES

8

Russia/Ukraine

Pea production up 41% in ‘16, another 24% in ’17

Kazakhstan

Lentil acreage from 17k acres in 2014 to 820k

acres in 2017

Argentina

Chickpea acres doubled in last 2 yrs (prod not so

much)

INDIAN PULSE CONSUMPTION

9

This year is the “reaction”

INDIA’S ISSUES

10

Food insecure nation

29% of income spent on food

Large farming segment

~40% of population are farmers

Two years of drought

Two years of large crops

Belief in “managed economy”

Trying to please both consumers and farmers

INDIAN DESI CHICKPEA PRICE

11

Problem for consumers

Problem for farmers

INDIAN GOVERNMENT RESPONSE

12

When prices were high

Banned futures trading

Banned exports

Imposed stock limits

Increased import tenders

Disposed of buffer stocks

INDIAN GOVERNMENT RESPONSE

13

When prices were low

Raised Minimum Support Prices

Set import limits

Imposed import tariffs

Required fumigation

Built buffer stocks

Allowed exports

Banned futures trading (proposed)

INDIAN RABI CHICKPEA PLANTING

14

Another year of record acres

RABI SEASON RAINFALL (OCT-JAN)

15

Main lentil and pea area

LATEST VEGETATION INDEX

16

Main lentil and pea area

PEA PRICES -- MUMBAI

17

Prices reflecting

supplies?

INDIAN PEA REQUIREMENTS

18

Import needs

roughly 1.5 –

2.0 mmt

INDIAN LENTIL REQUIREMENTS

19

Import needs

roughly 750kt

OPPORTUNITIES FOR PEAS -- CHINA

20

100-200 kt per year growth

OPPORTUNITIES FOR PEAS -- DOMESTIC

21

500-800kt of what?

OTHER OPPORTUNITIES FOR PEAS

22

Increase sales push to other South Asian

countries for chana substitution, similar to India

Increase sales to SE Asia for fractionation,

similar to China

Increase domestic processing

600-750kt announced/proposed

For domestic and export channels

Food, feed, pet food

OPPORTUNITIES FOR LENTILS

For reds, increase sales push to other South

Asian countries

Bangladesh, Pakistan, Sri Lanka

Strengthen ties with MENA countries

Greens, not as much concern

Already diversified

23

DIVERSIFYING MARKETS

24

CANADIAN PEA ACREAGE

25

20-25% decline

CANADIAN PEA SUPPLIES

26

Won’t drop as

much as expected

CANADIAN PEA EXPORTS

27

Just a modest

recovery

CANADIAN PEA BIDS

28

Green will

hold premium

13/14 14/15 15/16 16/17 17/18 18/19

Seeded Acres, 000's 3,325 3,985 3,680 4,239 4,093 3,200Harvested Acres, 000's 3,285 3,923 3,632 4,166 4,058 3,133Yield (bu/acre) 44.3 35.7 32.4 42.7 37.2 38.5

Supply ('000 tonnes) Carry-In 174 329 684 174 300 952 Production 3,961 3,810 3,201 4,836 4,112 3,278 Imports 25 31 15 30 10 10Total Supply 4,160 4,170 3,900 5,040 4,422 4,241

Disposition ('000 tonnes) Seed 270 250 287 279 220 250 Other Domestic 781 154 792 511 800 950 Exports 2,781 3,082 2,647 3,950 2,450 2,750Total Disposition 3,831 3,486 3,726 4,740 3,470 3,950

Ending Stocks 329 684 174 300 952 291Stocks/Use 8.6% 19.6% 4.7% 6.3% 27.4% 7.4%Source: Statistics Canada with LeftField projections in bold

CANADIAN PEA BALANCE SHEET

29

PEA OUTLOOK

Large ending stocks for 17/18

Exports down 1.5 mln t (India ↓, China ↑)

More domestic use

For 18/19

Drop in Cdn prod’n, limited growth in other countries

Not counting on more demand from India

Bit more interest from China

More domestic processing

Ending stocks back down to “normal”

30

CANADIAN LENTIL ACREAGE

31

20-25% decline

CANADIAN LENTIL SUPPLIES

32

Steady supplies

CANADIAN LENTIL EXPORTS

33

Subdued again

CANADIAN LENTIL BIDS

34

Been here before

13/14 14/15 15/16 16/17 17/18 18/19

Seeded Acres, 000's 2,720 3,120 4,035 5,860 4,405 3,400Harvested Acres, 000's 2,695 3,008 3,926 5,740 4,383 3,329Yield (lbs/acre) 1,850 1,456 1,427 1,248 1,287 1,454

Supply ('000 tonnes) Carry-In 467 786 365 73 405 799 Production 2,262 1,987 2,541 3,248 2,559 2,195 Imports 9 13 16 102 50 50Total Supply 2,738 2,786 2,922 3,423 3,014 3,043

Disposition ('000 tonnes) Seed 106 137 199 150 115 130 Other Domestic 93 105 505 411 250 300 Exports 1,753 2,179 2,145 2,457 1,850 1,975Total Disposition 1,952 2,421 2,849 3,018 2,215 2,405

Ending Stocks 786 365 73 405 799 638Stocks/Use 40% 15% 3% 13% 36% 27%Source: Statistics Canada with LeftField projections in bold

CANADIAN LENTIL BALANCE SHEET

35

LENTIL OUTLOOK

Large ending stocks for 17/18

Been there before (not helpful for bids)

For 18/19

Supplies steady

Need improved demand (will require low prices)

Not counting on more demand from India

Ending stocks a bit lower but still “comfortable”

36

CANADIAN FABABEAN ACREAGE

Sask acreage

mostly steady

CANADIAN FABABEAN EXPORTS

15-25 kt per year,

but very erratic

AUSTRALIAN FABABEAN PRODUCTION

Multi-year low

in 2017

FABA/BROAD BEAN PRODUCTION – EU28

Expansion in

Baltic & East

SELECTED FABABEAN PRICES

Aussie prices

bouncing back

CDN FABABEAN & FEED PEA BIDS

Establishing

a premium?

FABABEAN OUTLOOK

For 2017/18

More upside for export market

Some strength possible in protein market

For 18/19

Cdn production up a bit (as pulse alternative)

Steady as feed source

Continued export competition

Need domestic processing (longer term)

43

GLOBAL SOYBEAN PRODUCTION & USE

Usage growing

~16mmt per year

GLOBAL SOYBEAN ENDING STOCKS

Record large but

leveling off

CHINA SOYBEAN PROD’N & IMPORTS

Consumption growing

at 7-8 mmt per year

SOUTH AMERICAN SOYBEAN PROD’N

Small drop this year?

SOUTH AMERICAN VEGETATION

US ENDING STKS & FARM PRICE

USDA price steady?

CANADIAN SOYBEAN ACREAGE

Cdn acreage steady?

CANADIAN SOYBEAN EXPORTS

Cdn exports catching

up now but need to

keep moving

SOYBEAN BASIS

Western basis weaker

SOYBEAN OUTLOOK

For 2017/18

Waiting on the South American crop (already factored in?)

China shifts purchases to Brazil

Canadian supplies heavy

For 18/19

Acreage expected higher in US

Need another big production increase (again)

Any weather hiccups will lift prices

53

THANK YOU!

www.leftfieldcr.com

@leftfieldcr