Ample lentils weigh on market


Ending stocks larger than average | Disciplined growers are selling just enough to meet demand

Agriculture Canada has reduced its estimate of lentil ending stocks but it is still a number that will weigh down markets, says an analyst.

The latest forecast for 2012-13 is for 650,000 tonnes of carryout, which is down from the August estimate of 950,000 tonnes due to reduced production and increased exports.

That is lower than the 788,000 tonnes left over after the 2010-11 campaign but still well above the 10-year average of 261,000 tonnes.

Chuck Penner, analyst with LeftField Commodity Research, said farmers sometimes under-report their production to Statistics Canada so there is a strong possibility the stocks number may head higher.

While there is good demand shaping up for lentils, farmers have become disciplined sellers of the crop.

“What the market has to deal with is the willingness of farmers to sell those inventories and farmers have been pretty content not to,” he said.

Growers are selling just enough to meet the demand but they’re not dumping their lentils. They tend to wait for exporters to bid prices up by a cent or two per pound when they need to fill a vessel.

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Penner said demand has been steady from India, where the government released the first advance estimate of the kharif or summer crop calling for 5.26 million tonnes of production, down 18 percent from 2011-12 and 26 percent from 2010-11.

But India grows its chickpeas, peas and lentils in the rabi or winter season and soil moisture appears to be good for that crop.

“It’s been a great end to the monsoon season for them,” he said.

He believes it’s possible that lentil demand could slump in March when the winter crop is harvested but in the meantime demand should be good because inventories are low.

Penner’s forecast is for prices to remain fairly firm but he doesn’t see much upside due to the burdensome supply.

He believes green and red lentil prices will come together later in the 2012-13 marketing campaign be-cause growers cut back on red lentil acres more than they did with greens this year.

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