There is speculation in the pulse trade that Turkey could be in for another disappointing lentil crop in 2009, which bodes well for red lentil prices.
“Reports from Turkey are that seed was in short supply as high prices and a short 2008 crop forced farmers to sell and not keep any carryover,” crop analyst Larry Weber wrote in the Jan. 5 edition of his daily newsletter.
Seeded acreage is reportedly down 25 to 35 percent and conditions were dry as the crop headed into dormancy, raising concerns of a repeat of the 2008 drought.
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A report on Turkey issued by the United States Department of Agriculture’s Foreign Agricultural Service confirms farmers had difficulty obtaining seed and predicts below average production of the crop.
Turkey is the world’s third largest producer of lentils (mainly reds) and only Canada exports more. That makes events in Turkey an important harbinger for red lentil markets.
Production hovers around 500,000 to 600,000 tonnes but a drought in 2008 halved the country’s output to 280,000 tonnes and was partially responsible for red lentil prices cresting at 50 cents per pound last June.
Weber speculates 2009 production would be 131,400 tonnes below average if a 25 percent reduction in acreage occurred. And that is assuming normal rainfall, which doesn’t appear to be the case based on early season moisture reports.
Marlene Boersch, managing partner in Mercantile Consulting Venture, has also heard the 25 percent figure from reputable sources but she is skeptical.
“The information didn’t seem to make sense to me,” she said.
Lentils lost acreage to wheat and corn last year but when she looked at per acreage returns in the fall, lentils penciled out well for 2009.
“It’s still a very attractive crop,” she said. “My suspicion would be that (a 25 percent reduction) is a bit much.”
Boersch has put out some feelers with her contacts in the Middle East to explain the rationale behind such a big decline but hasn’t received enough feedback to draw reliable conclusions.
Weber suggested nervousness about Turkey’s 2009 crop could be reflected in new crop red lentil bids at the coming Western Canadian Crop Production Show.
But Boersch doubts farmers will see contracts from exporters for a while.
“Until they have a good handle on what the international situation is, they are loath to give too much of an incentive for (red lentils) or to price them too high,” she said. “I think they will be very standoffish this spring.”
Part of her reasoning is that exporters are still wrestling with Canadian acreage estimates in addition to international plantings.
Factors in favour of higher lentil acreage include a tailing off in wheat prices and poor movement through the Canadian Wheat Board, “relatively maxed out” canola acreage and the profit to be made growing red lentils at today’s prices.
But fertilizer prices have tumbled in recent weeks, diminishing one of the main advantages of growing a nitrogen-fixing pulse crop.
In the December 2008 issue of Saskatchewan Pulse Growers’ Pulse Market Report, Stat Publishing editor Brian Clancey said it appears likely that fewer peas and more lentils will be planted in Canada in 2009.
“It’s certainly not an unconceivable scenario,” said Boersch.
She noted that lentil movement has been good in 2008-09 despite a surprisingly large 920,000 tonne crop. On the flipside, Agriculture Canada is projecting 900,000 tonnes of pea carryout, up from 255,000 tonnes in 2007-08.
If pea prices don’t rise before seeding, there will likely be a reduction in Canadian acreage, said Boersch.
