Statistics Canada shocked lentil markets by finding an extra 437,000 acres of the crop in Western Canada.
In its November 2010 production estimate, the agency reported 3.48 million seeded acres of lentils in Saskatchewan and Alberta, up 14 percent from Agriculture Canada’s October supply and disposition report.
When the acreage increase is combined with a nine percent increase in average yields, it results in a record 1.95 million tonne crop, up 29 percent from last year.
“That kind of surprised folks about how big that is,” said Mike Jubinville, president of Pro Farmer Canada.
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The report is expected to put a damper on lentil markets.
“I think the lentil price peak occurred in September. We’re not going to see those highs again,” said Jubinville.
He expects bids for large green lentils to drop by two to four cents per pound. The price outlook is particularly grim for red lentils, which accounted for 55 percent of this year’s production because the crop faces stiff competition in world markets.
“All eyes are on Australia,” said Heidi Dutton, trader with Western Grain.
Pulse Australia forecasts 285,000 tonnes of red lentil production, which would be more than three times the previous four-year average. Some in the trade believe the crop will be closer to 300,000 tonnes.
Dutton said there has been flooding in New South Wales and Queensland but most of the lentils are produced in Victoria and South Australia, where it has been wet.
“I think on the red lentil front, we’ve got to see these markets coming a little bit lower,” she said.
Like most people in the lentil business, Dutton was taken aback by the Dec. 3 StatsCan report.
“It’s not healthy because it sends a message out that not only do we have a less than adequate lentil crop in terms of quality, we’ve now got huge amounts of tonnes.”
She has a hard time believing the 1.95 million tonne production number because farmers would have been marketing the crop more aggressively if that were the case. Dutton believes the amount of “marketable production” is closer to 1.3 million tonnes.
Jubinville said quality is definitely a bigger concern than quantity in 2010. The Canadian Grain Commission reports that 39 percent of green lentils and 18 percent of reds made the top two grades based on its Harvest Survey Program.
That leaves a big pile of extra 3, No. 3 and sample quality product to sell.
“We’re trying to get a sense on how to dispose of this size of off-grade type lentils. It’s a volume we’ve never had to deal with before,” said Jubinville.
He feels it is inevitable that there will be a sizeable carryover of poor quality lentils, which when combined with lower prices, will lead to a contraction in 2011 plantings back to 2009 levels of 2.4 million acres.
