Green lentil prices firm despite slower exports

New crop bids of 28 cents per pound for large green lentils and 25 cents for reds are attractive, but an analyst advises farmers to wait awhile before booking sales.  | File photo

Total pea exports should near the record set in 2016-17, despite loss of the Indian market, which remains a non-factor

The price outlook for pulses is for more of the same with the exception of yellow peas and kabuli chickpeas, which could see some increases, according to a couple of analysts.

The story in the lentil market is that while Canadian production was up 28 percent, total supply is flat, according to Marlene Boersch, managing partner with Mercantile Consulting Venture.

Usage is going to tell the tale of what happens to prices. She forecasts 2.6 million tonnes of exports, which is below Agriculture Canada’s forecast of 2.9 million tonnes.

Her carryout number for 2020-21 is 310,000 tonnes, which is well above Agriculture Canada’s 100,000 tonne estimate.

Canada shipped out 1.03 million tonnes of lentils in the Aug. 1 through Nov. 30 period, which is unprecedented.

Boersch believes the pace will slow down quite a bit in the second half of the year, she told delegates attending the virtual annual meetings of Saskatchewan’s crop organizations.

She is forecasting total year exports of 850,000 tonnes to India, 450,000 tonnes to Turkey, 225,000 tonnes to the United Arab Emirates and 200,000 tonnes to Bangladesh.

Those four destinations will account for two-thirds of Canada’s exports.

She forecasts 1.87 million tonnes of red lentil exports and 715,000 tonnes of greens.

Red lentils will end the year with an 11 percent stocks-to-use ratio. Anything under 10 percent is considered tight.

The ratio for large greens will be five percent and small greens seven percent.

That is why green lentil prices have remained firm despite the recent slowdown in exports.

“Unless we do see some changes in India, we might have seen the highs on the red lentils earlier and we’ll kind of coast for the remainder of the year,” she said.

New crop bids of 28 cents per pound for large greens and 25 cents for reds are attractive.

“But I would actually wait with booking them to see how we’re doing with the jockeying for acres,” said Boersch.

The pea market is a tale of two colours, said Chuck Penner, analyst with LeftField Commodity Research.

Canadian production was up four percent for yellows and 30 percent for greens. That is going to result in the unusual scenario where there will be more ending-stocks of greens than yellows in 2020-21.

Pea exports started off normal in August, exploded in September and then came back down to earth in October and November.

Total exports should come close to the record set in 2016-17, despite the loss of the Indian market. India will continue to be a non-factor for the remainder of the year.

China is projected to import a record three million tonnes of peas in 2020, 95 percent of which will come from Canada. He doesn’t anticipate Chinese demand slowing in 2021 due to strong feed demand in that country.

Yellow pea prices last week were in excess of $9 per bushel, which has happened less than 10 percent of the time over the long-term.

“We’re getting into some rare air when it comes to yellow pea bids,” said Penner.

However, he noted that prices have climbed higher than $12 in recent history.

Yellow pea prices tend to trend sideways from now through summer but this year they could show more strength due to the tight supplies.

New crop yellow pea bids are well above $8 and that should attract more acres.

Green pea acres will likely fall because they need a premium of about $2 per bu. to pull acres away from yellow peas and that is far from the case today.

Penner anticipates similar total pea supplies in 2021-22 as this year, with more of a traditional balance between yellow and green peas.

Ending stocks could fall even further in 2021-22 as new Canadian pea fractionation plants consume about 100,000 tonnes of the crop.

Canadian farmers produced a record 490,000 tonnes of dry beans, with pinto production up a whopping 58 percent.

“It initially started to look like, oh boy, we’re going to be massively oversupplied,” said Penner.

The outlook got even worse when U.S. farmers harvested a record 1.57 million tonnes of the crop, a 59 percent increase over last year.

The U.S. and the European Union are Canada’s top two markets for the crop.

Luckily, Mexico had its second straight year of poor production and there were also problems in Argentina and Brazil.

“We’re fortunate that after having grown this big crop we happen to have a market for them,” said Penner.

Canada usually backfills the U.S. as it supplies Latin America but this year there may be some direct shipments to Mexico and other countries.

Bean prices were extremely high this spring and summer. They dropped around harvest but have recovered faster than Penner expected.

“What that tells me is that the export demand is remaining strong.”

That’s a good thing because there are still plenty of beans to move.

Bean prices tend to move higher early in the calendar year, peaking in the summer.

The story with kabuli chickpeas is that global production was down 27 percent, supply fell 40 percent and ending stocks are forecast to drop 48 percent.

Canada was the exception to the rule. Supply was up slightly to 421,894 tonnes from 383,129 tonnes in 2019-20.

Global demand has been hampered by high prices and the COVID-related slowdown in the hospitality industry.

However, carryout is still expected to be down in Canada and definitely globally, said Boersch.

She anticipates stable to upward prices for kabulis for the remainder of this year and good prospects for next year as well, due to the falling stocks.

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