Poor U.S. lentil crop hikes price

Although lentil yields are down in the United States and Canada, one analyst says the rally may be limited because India, the main export market, has excess supply.  |  File photo

Green lentil bids are on the rise in the United States as farmers harvest a disappointing crop.

Prices have gone up about two cents per pound in the last two weeks as the extent of the drought damage is unveiled. The situation should also support prices in Canada.

Sportelli Pierfrancesco, a trader with Columbia Grain Inc. in Portland, Oregon, estimates the crop will average 16 bushels per acre, down from 24 last year.

Yields range from 15 to 20 bu. per acre in central Montana to 10 to 15 in eastern Montana and North Dakota.

He is forecasting 437,000 tonnes of total U.S. lentil production, down 24 percent from last year despite a nine percent increase in acres. His green lentil estimate is 325,000 tonnes.

There are also quality concerns because of harvest rain in eastern Montana, where 60 percent of the crop is grown.

“What really concerns me at this point in time is that some of the lentils might be affected with wrinkles,” said Pierfrancesco.

He estimates that 40 percent of the crop was already harvested as of the beginning of August. The colour has been good but the seeds are slightly smaller than normal because of the drought.

Chuck Penner, analyst with LeftField Commodity Research, said there is definitely reason for growers to be bullish about green lentils because Canada and the U.S. are the only major exporters of the commodity, and the crop is in trouble in both countries.

Slightly more than half of Montana’s lentils are in poor or very poor condition. There is no rating in North Dakota, which is the other main production region in the U.S.

“It’s just dismal, and most of that is medium greens,” said Penner.

Canada’s crop is also struggling because a lot of green lentils are grown in the drought-stricken region of south-central Saskatchewan. Penner is forecasting below-average yields for the province.

Green lentil prices have been plunging since the beginning of the year, but they appear to have bottomed out and are heading back up. Penner thinks prices won’t approach last year’s highs, but North America’s production problems should keep prices at strong levels.

The other major factor in green lentil markets is what is happening with India’s pigeon pea crop.

Indian farmers had planted 28.4 million acres of pulses in the kharif (summer) crop period as of July 28, which is a record pace. That is a seven percent increase over last year.

However, planting of the pigeon pea crop is 15 percent behind last year’s pace because of lackluster prices and competition from pigeon peas imports from East Africa and elsewhere. Green lentils are often consumed in India as a substitute for pigeon peas.

This year’s monsoon cumulative national rain total is about where it should be, and the main states where pigeon peas are grown are reporting either normal or excess rainfall, so Penner assumes yields will be decent.

However, Reuters reports that the rain has been erratic, resulting in some areas with excess moisture and others in deficit.

The story quoted Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities, as saying rainfall was good at the time of seeding, but then many regions did not get follow-up rain or received too much.

“This will bring down yields,” Galipelli said. “Production of rice, cotton, pulses and oilseeds could be lower than last year.”

Pierfrancesco said North American growers shouldn’t get too bullish because India produced 4.6 million tonnes of pigeon peas last year, up from 2.6 million tonnes the previous year and also imported plenty of green lentils, so it has an excess current supply.

“With pigeon pea (prices) being very low, there is no reason for India to go out there and buy Richleas and Lairds to substitute for pigeon peas,” he said.

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