All eyes in the lentil market are focused on Canada but the situation here is rather blurry, says an industry analyst.
It is becoming clear there is mounting demand for the pulse crop due to shortfalls in key production regions.
What is unclear is whether Canadian growers will plant a big enough crop to meet customer needs.
“Things are a little bit in flux. I would be hesitant to make a firm prediction,” said Marlene Boersch, managing partner of Mercantile Consulting Venture.
The consensus at Crop Production Week in Saskatoon in January was Canadian lentil acreage would fall 20 percent in 2013. That no longer appears to be the case.
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“My inclination is that we won’t drop lentil acres at all. Maybe they will stay stable to slightly up,” said Boersch. But then she qualified that statement.
“Against that you have a huge delay in seeding and we know what happens when (lentils) don’t mature and they get a frost. You can throw it into feed.”
The bottom line is she doesn’t know what acreage number to plug into her supply and demand estimates.
Stat Publishing editor Brian Clancey recently returned from the International Pulse Trade and Industries Confederation (IPTIC) conference held in Singapore where delegates were clamoring to find out any information about Canadian seeding intentions.
Markets are tense because it is becoming apparent India harvested disappointing red lentil and pigeon pea crops in 2012-13.
Stat Publishing reports 881,000 tonnes of Indian lentil production, down seven percent from the previous year.
The pigeon pea crop is estimated at 2.75 million tonnes, which is slightly higher than the previous year but well below the government target of 3.09 million tonnes. Green lentils are considered a substitute for pigeon peas.
In addition, there is a shortage of a wide array of other pulses such as black matpe and mung beans.
“This has resulted in stronger than expected demand for a wide range of pulses, including lentils and field peas,” wrote Clancey in a recent article.
The state government of Tamil Nadu in India recently tried to mount a massive tender for 100,000 tonnes of green lentils but the quantity was considered too risky for local traders. Boersch said it is another sign that India’s crop is short.
Lentil markets have gradually been building steam.
In February, Statistics Canada released a stocks report showing more lentils went into feed markets than originally anticipated. That prompted Agriculture Canada to substantially drop its carryout estimate.
Then in late March the world learned that U.S. growers are planning to plant 28 percent fewer lentils than they did last year. They mainly grow medium green lentils.
When Clancey adds it all up he forecasts a 14 percent increase in red lentil acres in Canada in 2013.
Exports of the crop have been very strong in recent months.
A number of market participants at the Singapore conference questioned his forecast for a 34 percent decline in green lentil acres given improved market conditions for the crop. Some are calling for no change in plantings but Clancey thinks that is unrealistic.
Boersch agreed that reds remain the more attractive class of lentil with new crop prices of 23.5 cents per pound for No. 2 or better, which is close to contracts of 24 cents for No. 1 green lentils. Reds yield better and are easier to sell than greens.
Boersch said there is a big push on to plant lentils in Australia where new crop prices are in the range of 29 to 30 cents per lb.
