Forward trading has left the pulses trade “bleeding” and deals are being struck defying market balance and fundamentals, traders and experts said at a virtual Agriculture Roundtable on Pulses.
“The forward trade is burning fingers but traders still want to offer trade in the market. I have told traders that I am not in a casino and I have been lucky,” said Hiten Kataria, Partner of Mumbai-based Sunraj Group, during the roundtable organised by the Global Grains and Pulses Council in league with Acuro AI.
Deepak Pareek, agriculture economist who anchored the roundtable, said a lot of traders were indulging in “casino” work and are not playing “straight”.
Lacking logic
“Without sowing numbers, African crops are offered in forward. Is there any logic? Traders have to do a lot of introspection. We have never seen a year like 2024 when a lot of defaults took place, leaving traders bleeding,” he said.
Forward trading is different from futures or derivatives. In forward trading, a contract is entered to deliver a commodity at a specified future time. For example, Brazil growers’ crops to be planted during the September-November period forward contracts are entered in February-March.
Himanshu Pandey, Profit Centre head at Singapore-based Valency International Pte Ltd, said the pigeon peas market, in particular, witnessed “rock and roll” over the past 4-5 months.
“There were a lot of issues in terms of supply chain. There were defaults in delivery and quality. Shipments were delayed by over a month,” he said.
Fundamentals lost
According to Sunil Patwari, Managing Director of Singapore-based Season Overseas, one or another new pigeon pea origin is emerging in Africa every year. “In Africa, Uganda and Nigeria are the new producers of pigeon peas,” he said, a hint at African forward trade offers.
“Forward trading has messed things up. It has hammered fundamentals and thrown them out of the window,” he said, pointing out that chickpeas (gram) were sold in August for post-Diwali delivery at $920 a tonne but prices crumbled, leaving traders in a fix.
Shyam Narsaria, CEO of Myanmar’s Arvee International, said the best part of pigeon peas trading for his country has been there has been no forward trading. “In forward trading, fundamentals get lost. Good prices of $1,300 a tonne last year encouraged more farmers to sow pigeon peas in Myanmar,” he said.
Patwari said pigeon prices have now dropped to around $700 a tonne.
Tanzania’s fiat
Guru Ravivarma, Director of Dar es salaam-based RV Exports, said Tanzania has made it mandatory for all its agriculture produce to be sold through the Tanzania Mercantile Exchange (TMX). “This will result in exports as no permit can be given without producing relevant records. So, if you buy in August, you can expect shipments in September only,” he said.
Pandey said Tanzania’s mandate has left traders with no parity. “TMX is the only gainer. It charges 3 per cent for the volume done,” he said.
Pareek, in his introduction, said global pulses production currently is 92 million tonnes (mt) against 119 mt demand for nutritional security. India, on the other hand, produced 24 mt, imported 6.6 mt and consumed 28 mt against a “normative” demand of 38 mt.
Rahul Chauhan, Director of iGrain India, said the import of pulses has been increasing since 2021 with supplies from Myanmar and Brazil being ample. As a result, Indian farmers have shifted to maize from urad.
Yield down
Harsha Rai, Vice-President, Sales, Mayur Global, said though the area under lentils has increased, the yield dropped. The Centre had 5.5 lakh tonnes of buffer lentils stock, and it was keeping the market guessing.
“When will it offload the stocks? At what price? The procurement has to begin in March, and arrivals have begun,” she said.
Jay Saraff, Director at Sydney-based Mandala Trading, said Australia was not worried about India reintroducing duty on pulses. Any duty on pulses will lead to price correction, and neighbouring countries such as Pakistan, Nepal, Bangladesh, UAE and Sri Lanka were comfortable with current prices.
Deepak Rawat, a senior trader at Canada-based Empros International, said this year’s pulses production could witness a drop by around 0.8 mt due to climate change. He also said that the stock transfer of beans and pulses was taking place from Canada to India.
Tanmay Kumar Deepak, Research Head, AgriWatch, said that with Karnataka offering a bonus for pigeon peas procurement, farmers in neighbouring States could prefer to offload there.