After years of being prodded to plant more red lentils, growers are now encouraged to exercise some restraint this spring.
“There is the risk of overproduction,” Gerald Donkersgoed, manager of Finora Canada Inc., told producers attending Pulse Days 2009.
Analysts are projecting more than two million acres of lentils this spring, with reds making up even more than the 47 percent of the 1.56 million acre pie they took in 2008.
Donkersgoed recalls what happened to green lentil prices in 2005 when growers flooded the market with product, driving prices as low as 10 cents per pound. He doesn’t want to see a nosedive with reds in 2009.
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“We’ve got a similar scenario potentially this year,” he warned growers.
Red lentils and mustard are showing the best returns in Saskatchewan Agriculture’s 2009 crop planning guides and red lentil prices have been rising of late, reaching 37 cents last week.
Brian Clancey, president of Stat Publishing, said 377,000 tonnes of lentils, largely reds, were exported between Aug. 1 and Nov. 31, which is about half of what is expected to be shipped in 2008-09.
With good crop movement and prices above the long-term average, growers will be tempted to plant more reds. Clancey forecasts up to 1.2 million acres of that class.
He thinks prices will trend lower starting in summer and lasting through harvest. His forecast for new-crop reds is 20 cents, although that could drop to 15 if there is overproduction or as low as 10 if the crop is massive.
Clancey encouraged growers to sell into price rallies for the remainder of the crop year.
Greg Simpson, president of Simpson Seeds Inc., said prices for reds have risen recently in response to poor crops in Australia and Pakistan, but that could be fleeting. He expects Canadian values to tumble when the Turkish crop comes off in April and May due to the severely devalued currency in that major exporting country. Prices could also be affected by India lifting its export ban, which is in place until March 31.
He expects prices for reds will be firm through March and then go lower starting in April. New-crop prices are also expected to fall. Donkersgoed agreed with that outlook, forecasting 16 to 20 cents for new-crop reds.
Simpson’s expectation for large greens matches his outlook for reds, with prices firm through March and moving lower in April. Many buyers have been devastated by financial losses associated with the global economic downturn.
Clancey confirmed that early season demand for large greens has been “really poor,” with exports to South America down 48 percent from last year. He expects demand to improve after January. New-crop prices should hover around 20 cents.
Donkersgoed forecast sagging prices for large greens for the remainder of 2008-09. He thinks lentil carryout could reach 200,000 tonnes, which is double what Agriculture Canada is forecasting. Much of that would be greens.
But he noted that large greens “could be a bit of a sleeper” in 2009-10 if growers plant more reds at their expense.
He was more upbeat about medium greens due to their inclusion in the U.S. food aid program, which has created a vacuum in commercial markets.
“I think that’s a growth industry,” he told growers.
Simpson agreed, noting that the weak Canadian dollar would make Canadian medium greens competitive in the U.S and Mediterranean area. He said prices for medium greens should remain firm and encouraged growers to plant more in 2009.
But he told growers to expect lower bids for small greens come June and July because of poor demand out of Morocco and Mexico.
Simpson expects new-crop contracts will be available for both green and red lentils in the May through July period, but Donkersgoed was skeptical.
“The trade got beat up pretty good this year on the export side and so did our buyers,” he said.
