Jaws dropped when Statistics Canada revealed growers planted more large green lentils and fewer red lentils this spring, the opposite of what the trade expected.
The agency’s June survey of 29,000 farmers said growers in Saskatchewan planted 560,000 acres of large greens, up 18 percent from last year, and 470,000 acres of reds, down 18, percent.
“This is a surprise to me,” said Ray McVicar, special crops specialist with Saskatchewan Agriculture.
“The Statistics Canada numbers show a different trend than what had been discussed in the industry all winter.”
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Brian Clancey, editor of the Stat Publishing special crops newsletter, called it the most surprising statistical report in recent memory.
Analysts, processors and exporters can’t rationalize why growers would plant 86,000 acres more of a crop that is in the lower end of its price range and 100,000 acres less of a crop at the opposite end of the spectrum.
Some traders contend growers must have misled statisticians to prevent a situation like last year where red lentil prices plummeted at harvest due to the large crop.
McVicar said there may be some fudging of the numbers but Statistics Canada usually gets the trends right in its seeded acreage reports. He surmised that green lentil area may be stabilizing after a precipitous decline from a high of 1.3 million acres in 2005 to 474,000 acres in 2006.
Darren Lemieux, lentil trader with Simpson Seeds, a Moose Jaw, Sask., processor building a red lentil splitting plant this summer, said it doesn’t matter if the seeded acreage numbers are right or wrong.
“It’s numbers that we have to abide by until we get an actual report of tonnes harvested.”
Lemieux said the report had minimal impact on current prices because there is so little stock on hand. But it could put upward pressure on new-crop red lentil prices and take the wind out of the large green rally, which has seen prices for No. 2 product shoot up to 14.5 cents per pound from seven cents last August.
The report sets the stage for a promising marketing season for lentil growers. Assuming normal yields, growers will produce 650,000 tonnes of lentils, which will be added to a small carryover of 100,000 tonnes of mostly large and small greens.
With an estimated total usage of 700,000 tonnes, that leaves 2007-08 carry-out at 50,000 tonnes, which should raise all lentil prices, said Lemieux.
“There is not much to fall back on in case of a crop disaster like 2002 or 2004,” he said.
McVicar said given the tight forecasted supply, weather will be key in determining lentil values.
“That’s probably more important than the Statistics Canada numbers when it comes down to (establishing) prices at harvest time.”
The most pressing issue on that front is last week’s bushel-robbing heat wave, which saw temperatures crest 35 C in many parts of the Prairies. Lentils can withstand heat better than peas and canola but a prolonged hot spell similar to what happened last summer would hurt yields.
“There are certainly people concerned about this heat coming in because it isn’t that good for a lot of crops,” said McVicar.
