Lentil market quiet heading into new year

CNS Canada — Heading into the New Year, Canadian lentil markets will be quiet, according to an analyst.

“It’s not exactly what farmers expected. They have had three years of very brisk intake and it will take a little bit of an adjustment to realize that the market is not coming to them as readily this year,” said Marlene Boersch, an analyst with Mercantile Consulting Venture in Winnipeg.

While current bids may be somewhat disappointing, the last few years saw lentils hit record prices, which attracted more producers to grow the crop.

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Current bids of 38 to 44 cents/lb. in Western Canada for large green lentils compare with prices as high as 69 cents/lb. seen over the past year, according to Prairie Ag Hotwire.

“We are seeing that high prices will entice other people to grow these crops. We’re seeing a bit more competition from Eastern Europe, especially from Russia, and they seem to have also grown some large green lentils this year,” Boersch said.

The increased production worldwide will lead to fewer lentil exports for Canada this year. Last year, roughly 2.4 million tonnes of lentils were exported; this year, Boersch thinks there will be somewhere between 2.1 million and 2.2 million tonnes exported.

Last year, the Indian government created a stockpile of pulse crops including lentils to control the market price in the country. In early October India announced it would be disposing of its stockpiles of pulses through auctions, selling at lower rates to areas of India and to various welfare programs.

When India first announced last year it would create the stockpiles, Canadians were surprised, but according to Boersch, even with the government disposing of the stockpiles, it won’t drive up demand.

“We were waiting for fresh (stock) to come through; (this announcement) will delay that further. It’s negative for prices actually,” she said.

India also had a record lentil crop last year of 22 million tonnes, up 35 per cent from a year earlier.

Pulse exports to India have become more expensive as well, after Canada didn’t receive an extension this month on an exemption to India’s crop fumigation policy.

The most recent exemption, which has allowed Canada to ship pulses to India without first fumigating them with methyl bromide, expired at the end of September.

Last year Australia also had a record lentil crop; this year’s is set to be smaller. The country is expected to harvest 420,000 tonnes — about half the size of last year’s crop, but in line with annual production for the previous four years.

“If they have a smaller crop they will be shipping less into the export market,” Boersch said.

In 2016, there were 3.2 million tonnes of lentils harvested in Canada, up from 2.5 million tonnes in 2015. This year, production is estimated at 2.4 million tonnes, according to Statistics Canada.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @AshleyMR1993 on Twitter.

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Ashley Robinson - MarketsFarm

Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.

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