The world’s largest lentil processor says there will be ample supply of the crop despite predictions of further acreage contraction.
Alliance Grain Traders Inc. president Murad Al-Katib said lentil area will likely fall below Statistics Canada’s forecast of 2.8 million acres, already down 20 percent from last year.
However, he still anticipates adequate lentil supply, largely because of an expected 700,000 tonnes of carryover.
“We’ll come in with a larger supply available for sale than we had last year, even with the acreage pullback,” said Al-Katib.
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Alliance thinks 90 to 95 percent of lentil acreage is already seeded. Strong yields because of excellent subsoil moisture could substantially offset the lost acres.
It also hopes for a return to normal quality.
Al-Katib said 2010 was an aberration that distorted the growth curve for the crop. Growers planted 3.48 million acres, up 45 percent from 2009.
Strong lentil prices encouraged growers to push their rotations and expand into unsuitable growing regions. Al-Katib said this year’s acreage retreat, which could see a contraction back to 2009 levels of 2.4 million acres, gives growers an opportunity to correct rotations.
Stat Publishing analyst Brian Clancey said many in the pulse trade think area could fall as low as two million acres.
“I wouldn’t even be surprised if it is below that a little bit,” he said.
Clancey thinks StatsCan’s forecast of 2.8 million acres is way off, given the crop’s dismal showing in 2010.
“Lentils put in their worst economic performance relative to other crops for as long as I have kept records. It was just a flat out crappy year,” said Clancey.
Markets turned worse for lentils and better for competing crops shortly after the seeding intentions report came out.
When combined with difficult seeding conditions in southwestern Saskatchewan, it could easily knock plantings back to two million acres.
Average yields would produce a 1.15 million tonne crop, which would barely cover annual exports.
Clancey said there will likely be a shortage of human consumption lentils, even if 80 percent of this year’s harvest is No. 2 or better.
However, the market seems to be shrugging off the looming crisis.
“There has been no signal to farmers that the market is in anyway concerned about what’s happening to (seeded) area,” he said.
Al-Katib isn’t buying Clancey’s gloomy forecast. He said there will be a “very significant supply” of the crop and demand prospects look promising.
Importers bought on a hand-to-mouth basis in 2010 because of weather events, high prices and the late Canadian harvest. They didn’t want to get caught with expensive inventory while prices were falling.
He thinks sales will pick up now that buyers know better what quality is available.
Also, importers must eventually replenish depleted inventories.
“At some point it can’t continue hand to mouth,” said Al-Katib.
He is forecasting “positive demand fundamentals” in the second half of 2011 and into 2012.
Supporting that premise is Alliance’s skepticism about reports of a return to normal lentil production in Turkey and about India’s bin-busting pulse harvest.
“We don’t think India is that great and we don’t think that Turkey is going to be that great.”
