Crop Production Week | Analysts say prices aren’t high enough to avoid a significant reduction in seeded acres this year
Red lentil prices need to rise to spark grower interest in the crop, say pulse market analysts.
“If current bids for red lentils persist, we’ll be looking at a major contraction in the red lentil production area,” Simpson Seeds Inc. president Greg Simpson told growers attending Pulse Days 2012.
Today’s bids of 16 to 17 cents per pound are not causing hearts to race.
Stat Publishing president Brian Clancey said there is a high probability that prices will creep back over 20 cents in the coming months.
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“Red lentil prices on average will be higher next season than they were this season,” he said.
However, he is still forecasting a contraction in red lentil production in 2012 to 629,300 tonnes, down from 780,400 tonnes last year.
Clancey is forecasting ending stocks of 297,200 tonnes, down from an estimate of 437,900 tonnes this year, although it could be a lot lower if more of the poor quality crop from 2010 is sold into domestic feed markets.
He is projecting 465,000 tonnes of large green lentil production, down from 606,600 tonnes last year, and 616,700 tonnes of overall green lentil output, down from 751,500 tonnes.
Green lentil carryout is expected to be 252,800 tonnes, down from an estimated 322,100 tonnes in 2011-12.
Initial bids for new crop No. 1 large green lentils are 21 cents per lb. Clancey said a realistic future value for the crop is in the 20 to 24 cent range, which is down from today’s values.
“I would anticipate lower average (green lentil) prices,” he said.
Total lentil production is forecast at 1.25 million tonnes, down from 1.53 million tonnes last year, but Clancey thinks red lentil production could be even lower than he is predicting, which would drive total output to as low as one million tonnes.
Simpson is forecasting 2.07 million acres of lentils and 1.07 million tonnes of production, including 475,000 tonnes of large greens and 415,000 tonnes of reds.
His large green number is almost identical to Clancey’s, but he expects 214,300 fewer tonnes of red lentils.
No price support is expected for large green lentils unless India’s pigeon pea prices improve, he said.
Raghavan Sampathkumar, who works for Saskatchewan Pulse Growers in India, said that is not in the cards.
The market is “quite comfortable” with the pigeon pea supply from India’s kharif (summer) crop.
“The response for Canadian green lentils will be quiet for at least the next six to eight months,” said Sampathkumar.
Canadian large green lentils, which are a good substitute for pigeon peas, will also face stiff competition in that marketplace from one of India’s neighbours.
“That’s what we hear from the market is that Myanmar is going to be preferred in case there is any shortfall in pigeon pea production in India,” said Sampathkumar.
