(RNI) — Old-crop lentils prices in Western Canada are easing despite tight supplies of both the green and red variety.
As of June 10, old-crop No.1 Crimson lentil prices (delivered to elevator) were sitting at 42.5 cents a pound, while No.1 Lairds were priced at 40.5 cents a pound, according to Prairie Ag Hotwire.
That compares to 32 and 29.5 cents a pound, respectively, for new-crop No.1 Crimson and Laird lentils.
Compared to month-ago levels, old-crop prices have moved from one to three cents a bushel lower.
The main reason for the decline is the gap between old-crop lentils prices and cheaper new-crop values, said Greg Simpson, president of Simpson Seeds at Moose Jaw, Sask. Companies don’t want to be stuck with a high-priced product to sell, he said.
“Most people are not willing to take stocks on now if they know it’s only a matter of time before they can buy cheaper lentils. They’re going to exhaust their existing supplies and wait for new-crop,” Simpson said.
Turkey’s red lentil harvest has also started to weigh on the lentil market, although the trade is uncertain as to the quality and size of Turkey’s crop.
For old- and new-crop prices, the recent surge in the value of the Canadian dollar versus the U.S. dollar has been another bearish price influence.
“In just a few weeks, the Canadian dollar moved from US80 to 90 cents, roughly speaking. That is nearly 10 per cent, so if you’re talking about 40-cent (per pound) lentils, that means a four-cent move in price just based on the currency alone,” Simpson said.
The recent move in crude oil futures to multi-month highs has meant higher transportation costs, including ocean freight rates, which also impacts the lentil price.
However, supplies for the commercial pipeline in Canada are only “trickling” in and that, combined with tight supplies, is keeping a floor under the cash market, Simpson said.
As for new-crop lentil prices, values in Western Canada are seen holding fairly steady over the next month until the trade gets a better feel for 2009-10 production and quality.
Simpson sees Canadian lentil acreage coming in close to 2.4 million acres, compared to the 1.97 million acres forecast in the last Statistics Canada acreage report.
Of that amount, 60 per cent will be red lentils and the balance will be green lentils, he believes.
Despite talk of dryness in Saskatchewan, Canada’s largest pulse producer, there is no reason to panic about this year’s lentil crop, he said.
“If 75 per cent of Saskatchewan was showing drought conditions and 25 per cent was showing adequate to good moisture levels, I would be concerned, but we’re seeing the reversed situation,” Simpson said.
“Lentils are very drought-resistant and they’ve had good germination. The plants are growing, there’s been little evaporation as a result of the cool weather and there’s been some showers. Really, there is still the opportunity for the province’s dry regions to be revived. It’s way too early to write the lentils in those areas off.”