Will farmers crush the red lentil market with a massive acreage this year?
That’s a question Informa Economics’ special crops analyst Chuck Penner is asking.
“Canadian lentil acreage will grow – by a lot,” said Penner in a presentation during the Canadian Wheat Board’s Grain World conference.
That’s easy to understand because of current prices, but possibly dangerous to new crop prices because the old crop rally is a product of luck rather than permanent new demand, Penner said.
The 2008 to 2010 bull market in red lentils, which has seen prices regularly above 30 cents per pound and sometimes more than 40 cents, is mostly due to the collapse of production in Turkey. That country’s red lentil crop dropped to about 100,000 tonnes in 2008 from its long-term average of about 500,000 tonnes.
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That left a big Indian market open to Canadian red lentils and many smaller markets around the Middle East. Canadian farmers grew a huge crop, but rather than killing prices, the Turkish deficit meant Canadian growers could get high prices and make huge sales.
There are few lentils left in storage in Canada because of huge exports, so the next few months should continue to be firm for prices as the last of the old crop is sold.
But no one should bank on another Turkish production collapse, Penner said. That country’s production prospects are good and conditions in India are also good.
Canadian farmers should expect to see lower world import demand in the new crop year. Penner said some experienced long-term lentil growers have been locking in new crop prices in the low 20-cents-per-lb. range.
However, the high lentil prices have attracted interest from many growers who don’t know the crop well but sniff profits.
That’s dangerous.
“It’s the guys who are jumping into it and don’t have experience (I worry about),” said Penner.
Some growers expect to be able to sell new crop lentils in the plus-30 cents range. That would be nice, but normal crops in Turkey and India could make that a forlorn hope, Penner said.
