ASK THE EXPERTS
Webinars from members of our industry
MEXICO GPC Ask the Experts Mexico: Kabuli Chickpea Market Outlook
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GPC’s Ask the Experts Mexico Kabuli Chickpea Outlook panel was moderated by Pedro Luengo of Legumbres Luengo. Felipe Sandoval of BeGrait provided the session’s expert analysis. The panelists included Demian Gallego (Global Food and Ingredients Inc.), Gerardo Chaidez (Viver Granos y Semillas SA de CV) and Sahid Hernandez (Agro Servicios Terminel).
In his presentation, Sandoval began by providing an overview of Mexico’s chickpea industry. Mexico’s domestic consumption of kabuli chickpeas is low, practically nil. Most of the production, therefore, is destined for export markets. Kabuli chickpeas are mainly produced in three states: Sinaloa, Sonora and Baja California. Mexico’s kabuli chickpeas are prized for their high quality and large caliber sizes. The crop is seeded from October through December and harvested from late February through April. On average, Mexico seeds 80,000 hectares to kabuli chickpeas and reaps 160,000 MT per year. The typical carry-in from one marketing year to the next is 67,000 MT. But for the past five years, carry-in stocks have exceeded 100,000 MT, the consequence of high prices leading to overproduction in 2016/17. Exports for the marketing year, which runs from March through February, usually average 144,000 MT.
The aforementioned overproduction in 2016/17 saw prices crash and disincentivized the seeding of kabuli chickpeas in subsequent crop years. For 2020/21, Sandoval estimates the area seeded to kabuli chickpeas at 55,500 hectares, up 19% from the previous year on improved grower prices and dry conditions at planting. Production is projected at 98,000 MT on reduced yields due to dry conditions. Carry-in is estimated at 31,800 MT. Exports are expected to amount to around 116,000 MT, leaving ending stocks of just under 1,300 MT.
Following the presentation, Luengo asked a few questions of the panelists, including about the demand situation during the outbreak of the COVID-19 pandemic and current prices for 44/46 caliber product. Sandoval responded that unlike other pulses, such as beans and lentils, which saw an exponential increase in demand and therefore a rise in prices, kabuli chickpea prices actually fell slightly, possibly because the product is mostly consumed in the restaurant/food service sector. On prices, he said it was difficult to give a definite answer but cited average prices of $1,100 to $1,200.
Sahid Hernandez of Agro Servicios Terminel then gave her thoughts on exports. She said that the export availability for MY 2019/20 was about 140,000 MT, of which 106,250 MT had been shipped to date. During March through May, exports flowed at a normal pace. In June, they were 35% lower than in June 2019. In July, they were down 20%, and in August they were down 55%. September was about the same as in 2019. October exports were down 16% and November were down 34%. It helped, she said, that the 2019/20 crop was smaller than average. Turkey continues to be the top destination for Mexican kabuli chickpeas (26%), followed by Algeria (20%) and Spain (12%), with lesser amounts shipped to other destinations such as Portugal, Italy and the UAE. In response to Luengo’s query about prices, Hernandez cited average prices of $1,080. She added that supplies could be short in February.
Next, Gerardo Chaidez of Viver Granos y Semillas SA de CV addressed the question of container availability in Mexico. As the pandemic hit, said Chaidez, the pace of sales and shipping accelerated, and the industry did encounter delays and shortages of containers. Over time, though, the shipping industry adjusted and by November the situation was fairly normalized. The problem now, said Chaidez, is shipping delays of 5 to 8 days, especially coming from Los Angeles. Container availability is not expected to be an issue for the rest of the marketing year. On pricing, he cited $1,050 to $1,100 for 44/46 caliber product.
Lastly, Demian Gallego of Global Food and Ingredients Inc. from Canada took the floor and tackled the question of whether or not there would be sufficient supply for MY 2020/21 given the carry-in and anticipated production. He said that in his opinion Mexico’s carry-in stocks were tight, given prices for January deliveries, but that it normally takes months for markets to react. The limited availability of chickpeas, he said, could lead to either a shortage or to demand shifting to other products. Looking at other origins, he said he heard that the U.S. is now producing larger caliber chickpeas (42/44 and 44/46). He cited prices for 9 mm out of the U.S. at $815 and out of Canada at $790. In Canada, burdensome old crop stocks remain and exert downward pressure on the market.
During the Q&A, the panelists commented on competition from India, where there has been an improvement in quality. All panelists said it was very difficult to obtain solid information from India. Hernandez said that because of their competitive pricing, India has taken some of Mexico’s market share. Chaidez was of the opinion that the area seeded to kabuli chickpeas in India would be down on low prices, as has occurred at other origins. He warned that this global decrease in production could led to a shortage as the world works through the existing carryover stocks.
Chaidez also mentioned that the caliber size distribution of Mexico’s chickpea crop has been trending in favor of the smaller sizes.
In closing, Gallego urged the actors in Mexico’s kabuli chickpea sector to band together and cooperate in order to combat speculators.
Presentation is available for download HERE.