Falling pea, lentil prices likely to take toll on acreage: analysts

Pulse acres are expected to plunge next year, losing ground to competing crops like canola and wheat, say analysts.

Brian Clancey, editor of Stat Publishing, forecasts that peas will be down about one million acres in the wake of India slapping a 50 percent import duty on the crop.

He said with India unlikely to be a big customer until 2019, farmers should probably cut back by two million acres to prevent a burdensome carryout but he doubts that will happen.

Farmers will still want to grow peas for rotational purposes and yellow pea prices have held up nicely after the initial $2 per bushel drop following India’s surprise announcement.

“The other thing is that historically whenever pea prices get low we always seem to find new demand somewhere,” said Clancey.

He doesn’t yet have a lentil planting estimate but believes there will be a substantial drop in reds, with some of those acres going to greens.

There is no Indian duty on lentils yet but exports are way down because India has a large stockpile of pulses and what looks to be a big rabi or winter crop on the way.

Clancey said reducing pulse acres might not be such a bad thing because there have been agronomic challenges with peas and lentils due to the spread of root rot.

Chuck Penner, analyst with LeftField Commodity Research, agrees with Clancey’s pea estimate. He believes farmers will plant about three million acres, down from 4.1 million this year.

“You get these statements, ‘nobody is going to plant peas,’ but the reality is there are always enough contrarians out there,” he said.

Penner also agreed that with red lentil bids of 16 cents per pound, a steep reduction in seeded acres is likely.

“For the past, I don’t know how many years now, pulses have kind of been at the top of the ranking for gross margin projections and this year they’re closer to the bottom,” he said.

Hard red spring wheat, canola, oats and flax are all crops farmers may choose instead.

Penner believes growers may also switch out of red lentils and into greens because with prices above 30 cents per lb., greens remain profitable. But that is risky.

“If people rush from one side of the boat to the other, from reds to greens, you can swamp the boat,” he said.

Brennan Turner, president of FarmLead, forecasts at least a 30 percent reduction in peas, or 1.2 million acres.

He believes canola will pick up the most of those acres because the current pace of exports and crushing volume means tight 2017-18 carryout stocks of about one million tonnes and that means continued profitable prices.

“It wouldn’t surprise me if you saw even another record year of acres in 2018 for canola in Canada simply because the price continues to support it,” he said.

Turner differs from the other analysts on lentils. He doubts farmers will reduce green lentil plantings because they can still make money on the crop at today’s prices and it is more attractive than malt barley or spring wheat.

He added the caveat that many things can happen between now and spring of 2018 that could alter his forecast.

“There could be something that changes with the Indian market between now and March. You might see a terrible rabi crop,” said Turner.

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