Farmers are so bullish about red lentils that many plan to grow them naked, without the protection of a contract.
They can’t get price protection because buyers feel no pressure to lock up prices.
“A lot of the buyers are unwilling to offer the contracts they had in the past,” said Saskatchewan Pulse Growers chair Maurice Berry, who farms near Carievale, Sask.
Buyers, who mostly serve markets in poor developing countries, assume a big crop will be produced and they are not certain their customers will be able to afford them if the worldwide economic crisis continues.
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“The risk for the players involved is just too great,” Berry said.
“Somebody could be left holding the bag.”
Pulse and specialty crops in early March generally have tight year-end stocks forecasts and better per-acre profit outlooks than the major crops. That’s drawing attention to crops such as lentils, chickpeas and canaryseed. Peas are the exception, expected to fall in both acreage and price because of growing world stocks.
The relatively poor durum price outlook is encouraging farmers in southwestern Saskatchewan to consider growing more chickpeas.
However, prices could slump if too much acreage is planted to any of the pulse or special crops, said Marlene Boersch of Mercantile Consulting Venture.
In a recent market commentary in the Saskatchewan Pulse Growers magazine, Brian Clancey of Stat Market Research suggested that a two million acre lentil crop will be seeded this spring, up from 1.6 million last year, which has relieved any supply worries that buyers might have had.
“If you put that number out there no one will bid for it,” Boersch said.
Lentils, especially reds, have raked in good prices over the past year as stocks dwindled and demand stayed strong.
This winter, farmers were unwilling to sell at prices much below 30 cents per pound, so prices stayed strong. Contract offers early this winter of 22 to 24 cents per lb. for new crop also gave growers reason to be bullish.
However, Boersch said farmers around the world have also noticed the strong prices and increased acres.
That factor, combined with the unlikelihood of repeat production problems in Turkey, an important lentil producer, means the bloom may come off this rose if prairie producers grow a good crop.
“Some of the other producing countries have looked at the higher prices and are trying to increase production and that is giving a big cushion,” Boersch said.
“Even if there is a big problem in Canada that deteriorates yields in Canada, it’s not going to have the same effect on price. It’s not going to draw down supplies as much.”
The biggest demand for Canadian lentils comes from the Middle East and the Indian subcontinent, so production and demand there are key factors to prices a few months out.
Saskatchewan Pulse Growers officials recently contacted a red lentil breeder working in India, who said lentil production there this year might not be as strong as earlier forecast.
Boersch said other non-market factors are also encouraging farmers to stick with pulses this season, perhaps the biggest being the large stocks of wheat that are only slowly clearing the system. Canadian farmers still have a lot in store and even in a good year many don’t like the Canadian Wheat Board’s delayed-payment system.
“You can’t convert it into cash when you want it,” Boersch said.
“They will be more inclined to grow the cash crops.”
Red lentils might look good, Berry said, but that doesn’t necessarily mean farmers will flood into the crop. Green lentil growers won’t want to take the risk of cross-contamination in their fields and other pulse growers will generally stick to what grows well on their land and in their farm’s microclimate.
However, Berry expects red lentil acreage will increase and hopes it isn’t by too much.
“Canada is such a big player in the world market. We have the ability to produce a lot. It’s something no one wants to see, an overproduction.”
Boersch agreed.
“If you do overproduce, you have almost guaranteed low prices,” she said.
“The uses for them are fairly straight forward. It’s an inelastic demand.”
That’s also true for edible beans, a crop southeastern Manitoba producers specialize in growing. The outlook for most bean types this year isn’t great, and Canadian acreage is expected to fall, but North Dakota acres may increase.
Heavy moisture levels in the Red River Valley mean many North Dakota farmers may not seed spring wheat this year and will switch to crops such as soybeans and edible beans. Also, soybeans can be cheaper to grow.
At the Manitoba Special Crops Symposium, the best bean outlook appeared to be pinto beans, which will likely have low ending stocks for the new crop even if acreage increases 15 percent.
