High quality lentil crop will weaken price but restore reputation

Pulse crop processors are relieved that this year’s crop is of exceptional quality.

“Thank God,” said Greg Simpson, chief executive officer of Simpson Seeds, a lentil processor based in Moose Jaw, Sask.

“It is definitely a blessing to have the quality we got.”

Saskatchewan Agriculture estimates 37 percent of the lentil crop will grade No. 1 and 57 percent No. 2, while pea grades are 47 percent No. 1 and 49 percent No. 2.

That is a far cry from last year when more than half of the lentil crop graded Extra 3 or lower.

Canada’s improved lentil crop quality means premiums for producing No. 2 and No. 1 product are rapidly disappearing. | Robin Booker photo

Simpson said Canada’s reputation as a supplier of quality lentils took a beating last year.

“I sat in on a quality meeting in July with all the importers of Canadian red lentils and they were complaining bitterly about the way we were shipping high levels of wrinkled and copper seeds,” he said.

“We’re in the penalty box, so we have to show them good reason to come back to Canada.”

Millers who usually experience a 15 percent loss when splitting red lentils were seeing double that.

“These wrinkled seed coats, these weathered seeds, these diseased seeds literally just explode in the process,” said Simpson.

They paid a good price for Canadian red lentils, so when Australia harvested a good quality lentil crop that was twice as large as usual, buyers immediately switched suppliers.

“I can barely get rid of a 2016 red lentil and there’s a few hundred thousand tonnes carried over,” he said.

“It’s a tough sell.”

It was the same story with green lentils. Canada lost the Laird market to good quality and far cheaper Richlea lentils out of the United States.

Canada also lost market share to large green lentils out of the Black Sea region that are selling for $100 U.S. per tonne less than poor quality Canadian product in markets like Algeria and Turkey.

Simpson had never seen as many dirt lumps in lentils in the 38 years he has been in the pulse business.

“It was at times almost impossible to make the grade,” he said.

So he is relieved that this year 89 percent of the Laird lentil samples that have been analyzed in his plants are No. 2 or better, although he believes the proportion of No. 1s is a lot lower than Saskatchewan Agriculture’s estimate because of bleaching caused by July heat and August rain.

The vastly improved crop quality means the premiums for producing No. 2 and No. 1 product are rapidly disappearing.

Overall prices are also declining because of the ample supply of quality lentils. Simpson estimates Canadian farmers harvested 2.4 to 2.6 million tonnes of the crop.

That is slightly higher than Agriculture Canada’s forecast of 2.3 million tonnes, which would be about one million tonnes smaller than last year but still the third biggest crop on record.

U.S. farmers harvested 378,833 tonnes of lentils, 41 percent below last year but still the third largest crop in history.

That is why lentil prices have been tumbling. A No. 1 large green lentil that was fetching 45 to 48 cents per pound in August is selling for 38 cents per pound, while reds have fallen to 20 to 21 cents from 24 cents in August.

Simpson believes there is further downside in the market.

“The world is awash in red lentils,” he said.

“We’re going to go from here possibly down a little bit more on reds.”

He fully expects Canadian farmers to lock their bins, but he believes Australian farmers will step in and supply the market because they will still be making money at today’s prices.

Australia is expected to harvest 420,000 tonnes of lentils, which is about half the size of last year’s massive record crop but in line with annual production during the previous four years.

His forecast for the green lentil market is much the same.

“It’s a sideways to down trend,” said Simpson.

There may be temporary bumps along the way, but there is nothing driving the market back up. The Indian government is forecasting 3.99 million tonnes of pigeon pea production, which is above the five-year average of 3.27 million tonnes, so that doesn’t bode well for green lentil demand.

He said there needs to be a production problem somewhere in the world, such as extreme heat or frost during Australia’s harvest or a big reduction in India’s winter pulse planting.

About the author

Markets at a glance


Stories from our other publications