NCDEX chickpea futures were lower again overnight. There is convergence between the January and April contracts as the spread is now down to around AUD$76 / tonne.
Converting April futures values to a price at Narrabri packers gives you a number of $680, currently the bid up at Narrabri is $690. So it’s safe to say we are tracking new crop values now which is disappointing given there’s still 4 months until the new crop comes in in India. This being the case we need to keep an eye on import tariffs which at this stage look unlikely for chickpeas given the cash bids are still above the Indian support price.
If India were to produce more chickpeas than they are expecting to it is not unlikely prices will slip further and in order to prevent prices falling below support values the government may try to put a floor in Indian values with the use of tariffs. Currently the support price sits at roughly $650 equivalent at the Narrabri packer.
This brings us to the big question, what is the crop in India actually like, will India produce more or less chickpeas in 2018. Looking at the weather map it tells you that NW India is actually pretty dry at present. Water storage is not too bad though with most dams in the NW carrying 60% to 70% of capacity, about average over the last 10 years. So irrigated crops should be fine while dry land crops are likely to be suffering. Although the area sown to chickpeas is up on last year at 8.437mha it is still behind the normal area of 8.681mha. While on India area rapeseed and wheat acres are the two with the biggest reductions.