The 2005 lentil outlook has market analysts, breeders and just about everybody else seeing red.
When asked what lentil farmers should plant in spring, a three-person panel of experts at Pulse Days 2005 agreed that all things being equal, growers should pick reds over greens.
The advice came with the caveat that producers should plant whatever crop is most agronomically suited to their land, but if it comes down to a coin toss then reds are less likely to be oversupplied.
“I think there’s room for red lentils to grow without prices hitting the tank,” said independent pulse analyst Greg Kostal.
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It was a sentiment shared by many other pulse crop officials in attendance at Pulse Days, including leading Canadian lentil breeder Bert Vandenberg, who said it makes sense for the world’s top exporter of green lentils to get more into reds.
“If we can be No. 1 in green lentils, why are we No. 4 in reds?”
About 80 percent of the world lentil trade is in reds, while 80 percent of Canada’s production is in greens.
But with varieties already available with “dramatically improved” disease resistance over Crimson and herbicide tolerant Clearfield lentils on the horizon, Vandenberg said Canada could soon vie with Turkey, India and Australia to become the world’s largest exporter of red lentils.
“When I look three years ahead, we’ll be very, very competitive in the red lentil business.”
But at least one grower doesn’t buy what the experts are selling. Indian Head, Sask., farmer Terry Rein said processors seem to be interested only in No. 2 or better red lentils, which can be hard to attain.
“If you’ve got those, you’ve got a good market. If you don’t, then you struggle.”
Rein, who also works at the Boersch Farms Ltd. pulse processing plant in Indian Head, said producers who harvested a No. 3 or feed quality large green Laird lentil in 2004 are having no trouble selling them, while those with No. 3 reds are having a tough time.
He worries that if growers load up on reds it will drive prices down but he’s not as concerned about greens, where Canada’s dominance in export markets makes it more of a price-setter.
“I’m going to grow greens,” said Rein.
If that is his plan he should think twice about seeding Eston-type lentils, warned Roy Legumex president Ivan Sabourin, who sat on the pulse market outlook panel along with Kostal and Saskatchewan Wheat Pool pea trader Shaun Wildman.
“I keep hearing that lentil acres will be going up next year and I’d like to caution guys on small lentils,” Sabourin told the 1,026 people registered for the 2005 version of Pulse Days.
While exporters can always find markets around the world for large green lentils, the demand for small greens is flat or inelastic, he said.
Sabourin expects the current highs for No. 2 or better Eston-type lentils to be maintained until spring or early summer and then drop “quite a bit lower” in the fall.
Once again that market commentary didn’t sit well with Rein. It conflicts with his experience at Boersch Farms where the processor is having a tough time finding enough Estons to meet customer requests.
Rein said any producers he knows who have grown Estons in the past three years have done all right.
And he noted that an earlier speaker, who was a pulse crop broker from Spain, said Estons are the Canadian lentil of choice in that country.
Kostal summed up the lentil outlook by saying in light of poor cereal and oilseed prices, farmers will be boosting their lentil plantings this spring, leading to weaker prices in the 2005-06 crop year.
The analysts also offered a brief chickpea outlook, saying the supply and demand situation appears to be tight for the foreseeable future.
Prices are high in Mexico, a country poised to harvest its crop in the next few months. That’s a good sign because Mexico generally sets the tone in chickpea markets.
“The outlook for chickpeas is very positive for this year and next. I don’t see prices coming off,” said Sabourin.
He believes that will prompt a slight increase in Canadian chickpea acreage, which has been depressed by disease pressure for years.
Kostal expects large kabuli chickpea prices to peak in 2005, but it will take a full crop cycle for desis to reach 13-14 cents per pound again because they are caught in the cross-current of cheap and plentiful yellow peas.
