Canada’s top lentil buyer is harvesting its second consecutive good lentil crop, which could put more downward pressure on already faltering prices.
The United States Department of Agriculture estimates Turkey will produce 550,000 tonnes of lentils, almost all of which will be reds. Harvest is expected to wrap up by the end of May.
That would be slightly larger than last year’s 500,000 tonne crop, which is about normal output for the country, and well above the previous two years where droughts drove production down to 295,000 tonnes in 2009- 10 and 131,188 tonnes in 2008-09.
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That shortage caused a spike in Canadian lentil sales to Turkey, with exports averaging 212,492 tonnes the last two crop years, up from the previous five-year average of 40,799 tonnes.
Strong sales have carried over into 2010-11, with 176,586 tonnes of lentils shipped to Turkey through the first seven months of the year despite a vastly improved 2010 harvest.
Turkey has bought more than twice as many Canadian lentils this year as India, the second largest buyer.
“The cupboards were just about empty, so (the imports) just basically allowed them to get back to normal consumption,” said Chuck Penner, president of LeftField Commodity Research.
Turkey has been Canada’s No. 1 or 2 buyer in each of the last three years but that could change if the 2011 harvest is plentiful. India is the other big buyer.
“This year the cupboards will be a little fuller to start with, so a decent sized crop is going to likely limit Canadian exports to some degree,” said Penner.
Some analysts expect a smaller crop than that predicted by the USDA. Stat Publishing sees 461,000 tonnes of Turkish lentil production. Another wild card is reports of late harvest rains, which may have damaged crop quality.
“So there’s still a bit of an unknown in the air,” said Penner.
Even if the USDA number is correct, he doesn’t expect exports to fall back to pre-2008-09 levels because Turkey has become a big re-exporter of Canadian product to the Middle East and North Africa.
But with Canadian growers expected to carry over a lot of 2010-11 lentils and produce another sizable crop in 2011-12, a modest decline in demand from Turkey isn’t good news for Canadians. Added to that is a likelihood of fewer sales to India.
“We actually need exports to increase rather than decrease, so any decline has negative implications for prices,” said Penner.
Lentil prices typically slump in the first part of June and may not recover soon given the poor demand outlook and the low quality of the carryout supplies, so farmers need to be wary.
“My advice is to be as aggressive as you feel comfortable doing in getting some new crop priced and working to decrease any old crop stocks you have carrying over,” said Penner.
He believes experienced lentil growers who know that 20 cents is a reasonable price may heed that advice, while new growers who are only familiar with 35 centlentils may not.
