Lock in lentil, pea prices now: analyst

Prices for old and new crop yellow peas, red and green lentils are 150 to 200 percent of what they were a year ago

Farmers should be locking in enough new crop peas and lentils at today’s attractive prices to cover the estimated 2016 cost of production, says an analyst.

“These are historical moments,” Marlene Boersch, a partner in Mercantile Consulting Venture, told farmers attending CropSphere.

“Don’t be discouraged when you don’t hit the top price. That’s not the goal. The goal is to have a good return per acre.”

Old and new crop prices for yellow peas and red and green lentils are 150 to 200 percent of what they were a year ago.

“The prices are unprecedented, so you should not carry a single kernel out into next year,” said Boersch.

Demand from India has been phenomenal. The country is expected to produce 16.76 million tonnes of pulses in 2015-16, well below the government target of 20 million tonnes.

“Seventy-plus cent lentils is like a gift from God, and you better treat it like that,” she said.

Canadian farmers produced 3.2 million tonnes of peas, which is 11 percent smaller than the previous year. Bulk exports are four percent ahead of last year’s pace.

Boersch is forecasting 270,000 tonnes of carryout and a favourable eight percent stocks-to-use ratio.

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She estimated that 20 percent of the 2015 crop hasn’t been sold.

She believes growers will plant 4.1 million acres in 2016, a 12 percent increase over last year’s crop. There will also be increases in Russia, Australia, the United States and France with world production rising an estimated 12 percent.

It looks like India’s winter crop is off to a poor start, but if conditions improve and India harvests a big crop, the increased global supply could pressure prices.

Canada harvested 2.7 million tonnes of lentils, which is almost identical to the previous year.

Exporters had shipped 1.15 million tonnes of bulk lentils as of Jan. 3, up 246 percent over the same period a year ago. India is almost solely responsible for the huge increase.

“That’s absolutely phenomenal. That’s why you have those prices on lentils,” said Boersch.

She is forecasting a paltry 101,000 tonnes of carryout and a bullish four percent stocks-to-use ratio.

Boersch believes only 10 to 13 percent of 2015 lentil production remains unsold.

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She is forecasting 4.75 million acres of lentils in 2016, a 24 percent increase over last year, which was up 25 percent over the previous year.

World production is projected to be up 15 percent. Demand will be solid, but India is the wild card, which is why she is advising growers to lock in new crop prices.

“You can already cover all your cost of production solidly for next year,” she said.

Canadian growers produced a small 91,000 tonne chickpea crop, and sales to the U.S. have been strong. It should result in 7,100 tonnes of carryout and a five percent stocks-to-use ratio.

“For the first time in a number of years, we’ll have a very, very low carryout because demand for kabulis is good,” said Boersch.

Green and red lentils, mustard and yellow peas are expected to be the most profitable crops in 2016.

“The pulses are kingpins,” she said.

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