This year’s lentil market outlook session at Crop Production Week closely mirrored last year’s with lots of talk about prices dipping below 20 cents per pound.
Of course last year’s panelists were dead wrong. Prices for both reds and large greens topped 40 cents in 2009.
That’s why Stat Publishing editor Brian Clancey was a little more cautious with his 2010 projections, providing growers with a range of price probabilities.
He said there was a 40 and 50 percent chance respectively that reds and large greens would drop below 20 cents and a 10 percent chance each crop will top 30 cents.
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“I’ll create hope for you but warn you of the risk that prices will be lower,” Clancey told a crowded room of pulse growers.
The reason for the substantial downside price risk is his expectation that growers will seed 3.2 million acres of the crop this spring, up 38 percent from last year’s plantings due to the phenomenal returns generated by the 2009-10 crop.
Oversupply shouldn’t be a problem heading into 2010. Statistics Canada is reporting a record 545,000 tonnes of exports for August through November.
Clancey said 68 percent of his total red lentil export estimate for the 2009-10 crop year had already left the country in the first four months of the shipping season.
“There is a very strong potential for the carryout to be much smaller than it currently looks,” he said.
But even with minimal carryout, there is still going to be a supply surplus. Clancey is forecasting a 312,400 tonne increase in lentil production.
Martin Chidwick, senior vice-president Canada for Bissma Pacific Inc., said he was slightly more bullish than Clancey.
“I don’t see any reason to be below 20 cents,” he said.
He was contracting reds at 22 cents and large greens at 23 cents before Christmas.
Chidwick thinks there is more downside price potential in greens than reds. He said the demand for greens is inelastic compared to reds, which are sold into India and various Muslim markets.
However, other speakers at Pulse Days said a new market is emerging for green lentils in India.
Red lentils aren’t subject to the same kind of colour degradation as greens so growers can store them for two to three years while they wait for markets to rebound.
Heidi Dutton, trader with Western Grain Trade Ltd., expects to see new crop bids for reds and large greens in the 20 to 23 cent range, which could be a good deal come fall considering her forecast of 3.1 million lentil acres.
She said 75 percent of the 2009-10 crop has either been spoken for or exported. Dutton expects the remaining 25 percent to be difficult to pry loose from growers.
“You are driving the market so enjoy the ride but don’t forget to sell because the way down is not as much fun as the way up,” she said.
