Murad Al-Katib came under considerable fire last summer for his red lentil price forecast. But with bids hitting 18 cents per pound last week, he feels vindicated.
“That’s a long way from 10.5 cents,” said the president of SaskCan Pulse Trading Inc., the largest red lentil splitter in the Americas.
At Pulse Days in Saskatoon in January 2006, Al-Katib assured producers that prices would remain in the 13 to 17 cents per lb. range throughout the 2006-07 marketing campaign.
By August it looked as though his forecast would be off the mark. Red lentil prices had fallen to 10.5 cents and growers were not impressed.
Read Also
Coloured bean production down, whites are up
Bean prices have been slumping and the outlook is for more of the same.
Kevin Hursh, an agricultural broadcaster and farmer from the Cabri, Sask., area, said red lentil promoters had some explaining to do.
Saskatchewan Pulse Growers and Al-Katib had used the Pulse Days forum to encourage a boost in red lentil plantings and by summer the industry was saddled with what appeared to be an overproduction of the crop.
“Murad was there (at Pulse Days) waving the flag saying the price is likely to be at least 13 cents in the fall,” Hursh pointed out in an August interview.
Even the chair of Saskatchewan Pulse Growers was starting to question his association’s green light for red lentil message, wondering if his board had been steered in the wrong direction.
“It’s disappointing because we were led to believe that if you increase acres don’t worry, we’ll find markets for them. Maybe we have markets for them but maybe the markets aren’t willing to pay the prices,” said Dean Corbett.
Al-Katib never wavered from his forecast. He said if the price was still 10.5 cents per lb. in March 2007, he would be ready to eat some serious crow.
“My message then was we’re at the start of the crop year. It’s a long way until the next crop,” he said, reflecting on the comments he made in August 2006.
Since then, prices have climbed steadily. Last week, some producers reported getting 18 cents per lb. delivered for their reds.
Al-Katib said it confirms that growers made the right decision to plant more reds, a crop that is a staple in many markets around the world, compared to greens, which are geographically limited.
“Our message on reds has always been clear. It’s a crop that moves consistently,” he said.
The reason prices tumbled to 10.5 cents last summer had to do with above average crops in two of the world’s main red lentil growing regions.
“Canada had more acres than ever before and Turkey had a bigger crop than they’ve had in a decade,” said Al-Katib.
But India was short lentils and became an aggressive buyer in the fall. By December it became apparent Australia had a complete crop wreck, which further buoyed prices beyond even Al-Katib’s expectations.
With strong late-season sales, Agriculture Canada now predicts lentil stocks by the end of the crop year will have fallen to 150,000 tonnes from 475,000 tonnes the year before.
Al-Katib hopes the pulse industry has learned a valuable lesson not to jump to conclusions early in the marketing year.
“The pessimists are always the ones that drag down our agriculture industry in this province,” he said.
There appears to be a new optimistic tone in red lentil circles. CGF Brokerage & Consulting, a Saskatoon firm that was bearish on reds all year and predicted at one point last summer that prices wouldn’t rise about 12 cents per lb., is now singing a different tune.
“Clearly the way things are looking right now, definitely the world can support 15 cents per lb.,” said company co-founder Merv Berscheid.
“The strength of the Indian economy has resulted in a higher food price threshold.”
His price forecast comes with the caveat that producers harvest a crop similar to last year’s estimated 305,000 tonnes of red lentils.
That doesn’t appear out of the question given Agriculture Canada’s prediction for a nearly identical-sized crop.
Al-Katib agreed with the agency’s 1.38 million acre forecast, but declined to speculate on a price estimate.
“I learned my lesson,” he said with a laugh.
