Indian demand key to red lentil exports

Canadian production could rise 31.5 percent but strong Indian demand should support prices

Sean Pratt reports from the Global Pulse Convention in Cesme, Turkey, about what is driving pulse markets.

CESME, Turkey — Red lentil production will likely be way up this year, but India is expected to consume most of the increase.

Gaetan Bourassa, chief operating officer of AGT Food and Ingredients, said red lentil prices will hinge on how much India buys.

He estimates Indian demand in 2016-17 at 95,000 tonnes per month for a total of 1.14 million tonnes for the new crop year.

There will be another 350,000 tonnes of “surprise demand” as a pigeon pea replacement due to a 1.6 million tonne shortfall in that crop in India.

India is forecast to produce 275,000 tonnes of red lentils, leaving 1.19 million tonnes of demand that will have to be met through imports.

“We think one to 1.2 million metric tonnes in the coming season is a real possibility,” Bourassa told delegates attending the 2016 Global Pulse Convention in Turkey.

That country is forecast to import 350,000 tonnes, which is the same amount it will likely buy this crop year.

Bourassa is forecasting a total of 2.45 million tonnes of red lentil exports from Canada and Australia in 2016-17, a 17 percent increase over the current crop year.

That is good because there is a big crop on the way in both countries.

Canadian farmers planted an estimated four million acres of red lentils.

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Bourassa is using an average yield of 23 bushels per acre, which is below the previous five-year average of 25 bushels per acre.

That is because lentils are being grown in many non-traditional areas this year.

“Even in traditional areas, we have farmers who are pushing the rotations a bit too far,” he said.

He is forecasting 2.5 million tonnes of Canadian production, up from 1.9 million tonnes last year. There will be two million tonnes of exports and a “reasonable” carryout of 341,862 tonnes.

“If the story does play out and India does import one to 1.2 million metric tonnes you wouldn’t have much carryout,” said Bourassa.

Sanjay Jain, chief executive officer of Jawaharlal & Sons/Prakash Overseas, an Indian importer and miller of pulse crops, doesn’t have a problem with Bourassa’s Indian import number.

“Yes, it is possible if the prices are good,” he said.

In fact, he said India’s demand exceeds 100,000 tonnes per month, which is higher than Bourassa’s number.

Jain said India is sitting on a stockpile of 150,000 tonnes of Canadian lentils, which should last until the new crop is harvested in August.

Sanjiv Dubey, director of GrainTrend Group, an Australian pulse crop trading firm, took issue with Bourassa’s forecast of 300,000 to 400,000 tonnes of Australian red lentil production.

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He said Pulse Australia is forecasting 618,000 acres of red lentils and 350,000 tonnes of production.

However, the trade believes it is more like 865,000 acres and 475,000 tonnes of production.

Dubey said 60 to 70 percent of the crop will be small red lentils, which will be shipped to Bangladesh, Pakistan and Egypt.

It is dry in Australia’s chickpea growing area, but moisture conditions are “perfectly fine” where the lentils are planted.

Panel members from Pakistan and Sri Lanka said lentil demand should be stronger than usual because chickpea prices are sky high, which is encouraging substitution.

However, a grain miller from Egypt expects slumping demand in that country because of the poor condition of the economy.

Merve Fettahoglu, international trade manager of Goze Agricultural Products and Marketing Inc., a Turkish pulse processing company, said growers in that country planted 30 percent more red lentils this year than last year.

The trade is expecting 400,000 to 450,000 tonnes of production, up from 340,000 tonnes last year.

“The weather conditions are so far, so good,” she said.

A couple of panelists provided price projections ranging from US$650 to $750 per tonne.

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They said buyers are scared of the Canadian production estimate of 2.5 million tonnes.