Prices of pulses have been volatile over the past two years, primarily reflecting weather-reduced supply shortages for two seasons, Rabobank said, but good yields and an expanded area in most key pulse-producing regions during the 2016-17 season have spurred a recovery.

In its “Checking the Pulse” report, Rabobank noted that food use is expected to remain the key driver for pulse demand, mainly in developing countries.

“Pulse markets are — and will remain — fragmented, made up of many different pulse categories, each with specific characteristics,” said Stefan Vogel, Rabobank’s global sector strategist – grains and oilseeds. “Supply can quickly outpace demand in the case of high prices (and thus increased plantings), while weather-related yield issues in a key producing country can drive prices upward in order to ration demand.”

Rabobank noted that India is the key to global pulse markets, both as a producer and importer. The country produces approximately 25% of the global output, consumes about 30% of global use, and imports 40% of the global trade. Even so, Indian per capita consumption of pulses is below that of the 1980s and is ripe for growth, Rabobank said.

“The country’s large demand and the forecast continued import needs will benefit farmers in key exporting countries like Canada and Australia,” Rabobank said. “Future demand growth in India will benefit from an ever-growing number of new products that contain pulses and the generally low price elasticity of pulses in India, which is well below that of substitutes like vegetables and livestock products, limiting the impact of high prices on consumption reductions.”

Rabobank noted that meat substitutes, derived from non-meat protein sources, are in demand. Even so, pulses only account for a small share of the protein used in those products, Rabobank said.