Farmers are likely planting more lentils than what they told Statistics Canada, say analysts and a major processor.
Alliance Grain Traders thinks growers will be making changes to their seeding plans right up until they start seeding.
“Management expects that the key pulse crops handled by AGT may see a last minute boost in acreage as a result of recent strong performance of lentil prices,” the company said in financial documents related to its first quarter results.
AGT said the high price and reduced availability of nitrogen fertilizer will also factor into farmer decisions to grow more lentils.
Marlene Boersch, a partner in Mercantile Consulting Ventures, agreed that lentils will be a popular choice for farmers this year.
She is forecasting more than three million acres, which is much higher than Statistics Canada’s 2.86 million acre estimate. The record was 3.44 million acres in 2010.
Statistics Canada estimates that 648,000 tonnes of lentils were in the system as of March 31, which is 41 percent less than the same time last year.
“Export performance has just been excellent,” said Boersch.
Chuck Penner, an analyst with LeftField Commodity Research, questions StatsCan’s stocks number.
“I don’t know that supplies are that low, but they are tight,” he said.
However, Penner agreed that farmers could plant more than three million acres this year.
He isn’t overly concerned about a big crop because he expects a sizeable increase in red lentil export demand from Turkey and India.
Turkey’s crop has been devastated by drought, while prices in India have continued to climb, indicating that its lentil crop was damaged by rain and hail in late February.
Boersch said Canada had exported or consumed an estimated 1.5 million tonnes by March 31, which is 71 percent of the 2.1 million tonnes of lentil supply.
“That’s quite excellent,” she said.
That leaves 280,000 to 300,000 tonnes available for export and domestic use for the rest of the year after factoring in seed, feed and carryout. It’s equivalent to 70,000 to 75,000 tonnes per month.
The average monthly usage has been around 190,000 tonnes this crop year, so that’s a considerable reduction.
“You can see there is a tightness there. That’s why we have seen prices respond,” said Boersch.
“What has happened on lentils over the last several weeks is that we are now much closer to international grower prices.”
Processors were paying 25 cents per pound for red lentils last week, which is going to attract more acres this year.
Boersch isn’t too concerned about a big lentil crop either because she expects the year will begin with a clean slate of less than 200,000 tonnes of carryout. However, she would be careful not to carry old crop into the new crop year because prices will likely fall with the big acres going in the ground.
She expects growers to switch out of greens and into reds because the price is right, they are easier to grow, they have better movement and there have been impressive yields with new varieties.
“There’s lots of things pushing towards the red lentils, so we have to be a little bit careful. I think it’s possible we’ll overdo the reds a little bit this year.”