An analyst thinks the price response to dwindling supplies came too late for Canadian farmers to change seeding plans
The red lentil bull run is not over, says a leading pulse crop analyst.
Brian Clancey, editor of Stat Publishing, expects even higher prices in 2020-21 due to free falling carryout stocks.
He believes world stocks will drop to a paltry 277,000 tonnes next year, down from an already low 557,000 tonnes at the end of the current crop year.
“We’re looking at huge reductions in residuals,” Clancey said during a webinar organized by the Global Pulse Confederation.
Red lentil prices have been climbing steadily in April but Clancey thinks the price response to dwindling supplies of the crop came too late for Canadian farmers to change their seeding plans.
“If that happened three months ago, the amount of land in red lentils would probably be substantially higher than I’m currently forecasting,” he said.
Clancey is estimating a modest 300,000 acre increase in Canadian red lentil plantings and 400,000 acres worldwide.
Using average yields, he is forecasting a 500,000 tonne increase in world production but due to low carryout from the 2019-20 crop, supplies will only be up 240,000 tonnes.
“That’s price positive in my mind,” he said.
That is because global consumption of the crop is expected to increase by 500,000 tonnes.
Clancey expects prices to start off 2020-21 at levels even with the current crop year and then trend upwards, setting their highs later in the new crop year.
Australia is Canada’s main competitor in the red lentil export market.
Mostyn Gregg, a pulse crop trader with Agrocorp International in Australia, is forecasting a 10 to 15 percent increase in acres in that country.
But carryout from the 2019-20 crop will be next to nothing. Stocks are already below 50,000 tonnes.
“Canada has to carry the exporting load for the world until we come on in November,” he said.
He is forecasting 450,000 tonnes of Australian lentil production, which would be a nice rebound from the 338,000 tonnes produced last year.
The other major supplier is the Black Sea region. Kintal Islamov, chair of Kazakhstan’s JSC Atameken-Agro, does not think there will be any increase in lentil acres in the region due to competitive wheat prices.
On the demand side, Clancey expects a little more import volume from India. The country has punitive duties and quotas in place on yellow peas and red lentils are one of the most economical substitutes available.
He is forecasting 567,000 tonnes of Indian imports, which would be up slightly from this crop year but about half of the peak volume of a few years ago.
Pawan Mundada, a pulse trader with ETG Agro Processing India, agreed that there will be solid demand from India due to the government’s commitment to provide one kilogram of pulses free of cost every month to 160 million families to help them through the COVID-19 crisis.
“This will remain for the next three months,” he said.
That is a new source of demand for 600,000 tonnes of pulses.
The Indian government is forecasting 1.3 million tonnes of rabi season lentil production, but the trade thinks the crop will be 10 to 15 percent smaller than that.
Mundada said the Indian government has been amassing a huge stockpile of pulses the past few years.
“But those stocks have been depleting,” he said.
The government used to have more than two million tonnes of pigeon peas but that has dwindled to about 350,000 tonnes.
Its stockpile of chickpeas was 1.6 million tonnes in March but due to COVID-19 supply disruptions it has been forced to tender supplies to processors who are converting whole pulses into split pulses, which has shrunk government stocks.
Hadi Doni, head of sales with Doni & Company, an agriculture brokerage firm based in Karachi, Pakistan, expects Pakistan to remain an active buyer because there are no red lentil stocks in warehouses.
The country usually imports about 125,000 tonnes of the product annually and has already purchased about 40,000 tonnes in 2020.
Gregg, who does business with Bangladesh, expects that market to remain a consistent importer of lentils in 2020-21.
Fethi Sonmez, a trader with Turkey’s Armada Foods, expects a 30 percent rebound in Turkish lentil production to 400,000 tonnes.
But the country will remain a large importer and re-exporter of the crop, importing an estimated 300,000 tonnes in 2020-21.
Sudhakar Tomar, managing director of Dubai’s Hakan Agro, is forecasting 175,000 tonnes of demand from Sri Lanka, which is higher than normal.