This would be a nice lentil harvest if exporters had two years to sell it, say crop analysts.
Growers produced 1.2 million tonnes of lentils in 2005, double the average of what was harvested the previous four years.
A carry-in of 245,000 tonnes from the previous marketing year is compounding the problem, which will result in an estimated 550,000 tonnes of carryout at the end of 2005-06 campaign, according to Statistics Canada.
“We’re going to carry out an entire crop year of export,” said Murad Al-Katib, president of Saskcan Pulse Trading Inc.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
Saskatchewan growers took off 800,000 tonnes of crop before steady rains disrupted harvest. Some of the greens left in the fields have deteriorated but 80 percent of the reds should grade No. 2 or better, said Al-Katib.
Generally speaking there is good availability of all classes and types of lentils but buyers are circling like vultures waiting for prices to drop.
“The difficult part of that is price levels have already fallen dramatically. Grower levels are at significant discounts to last year,” said Al-Katib.
Red lentils, which comprised an estimated 30 percent of this year’s crop, are moving but there isn’t much action on greens.
Top quality reds are selling at a three-cent premium to greens, reflecting the fact that 80 percent of world demand is for reds while 70 percent of what Canada grows is greens.
Al-Katib said this year’s harvest proves Canada must find new markets for greens or learn to grow less.
Wild Oats Grain Market Advisory publisher John Duvenaud said given the circumstances, curtailing lentil acreage would be logical but is unlikely.
The crop is delivering $7.50 per bushel compared to $1.50 per bu. barley and $2.20 per bu. feed wheat. And with soaring fertilizer costs, pulse crops are still an attractive option.
“I suspect that our lentil acreage will be higher next year again. Where all those lentils are going to go, that’s a good question.”
The marketing dilemma has been exacerbated by U.S. farm support programs, which encouraged American growers to seed 450,000 acres of lentils in 2005, up 30 percent from the previous year.
Duvenaud’s advice to growers is to grab any decent bids they see early in the marketing year.
“It’s going to be a long, slow ride back up.”
Al-Katib agreed that low prices are here for a while, but he doesn’t think they’re going to get any worse because world supplies are tight.
“Buyers are being stingy today on what they want to pay but at some point they’re going to have to start buying so I really don’t see any downside pressure,” he said.
Three events that may change the marketing dynamic for red lentils are Australia’s harvest in December, India’s in March and Turkey’s in May.
