Agriculture Canada forecasts 2010- 11 lentil prices will fall below the level of the past few years but will remain well above the 10-year average.
Prices are expected to be pushed lower by a big Canadian crop and slumping demand from importers.
Red lentils are forecast to fall to an average annual price of 26 cents per pound, down from 30 cents in 2009- 10. Large greens aren’t far behind at a forecast 29 cents in 2010-11, down from 34 cents.
Peter Wilson, global supply chain manager for JK International Pty Ltd., an Australian pulse trading firm, thinks prices need to fall more.
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If Agriculture Canada was buying in today’s market at those values, he’d sell to them in a heartbeat, he said.
Ray Craswell, a red lentil grower from Strasbourg, Sask., likes what he sees in Agriculture Canada’s price forecast.
“I’d be happy enough with those,” he said.
But he wonders if a big Canadian harvest could drive average red lentil prices a little lower. He expects his crop to yield 1,800 lb. per acre, which is about average.
“We’re not out of the woods yet,” he said, noting disease and frost risk.
Agriculture Canada’s price estimate stems in part from its production forecast of a near-record 1.4 million tonnes, including a record 810,000 tonnes of reds and 400,000 tonnes of large greens, down from 510,000 tonnes last year.
The other piece of the puzzle is a 33 percent reduction in exports to Turkey and India, two of Canada’s largest lentil markets, due to adequate rains and a return to normal yields in both countries.
Murad Al-Katib, president of Saskcan Pulse, said Canada’s crop could be bigger than Agriculture Canada’s forecast. He doesn’t buy its estimate that 540,000 acres were lost due to excess moisture.
“In our opinion, lentil acres went in the ground,” he said.
Growers made sure their high-value lentils were seeded first.
“Certainly the acres are in the ground and frankly they are progressing quite well,” said Al-Katib.
He also cast doubt on the export forecast. Al-Katib predicts another good year for exports, noting that there was strong demand last year despite unheard of lentil prices.
He said Australia’s crop is a long way from the bin and while India’s summer pulse plantings are up 15 percent and monsoon rains have been near normal, a lot can change between now and harvest.
Wilson said India’s winter crop is the one to worry about because that’s where growers plant crops that compete with Canadian pulses. It won’t go in the ground until October.
Australia’s lentil crop looks “very, very good.” He anticipates more than 200,000 tonnes of production. The vast majority of that would be exported.
