Lentils will lose ground to wheat in 2011, according to Pulse Days panelists.
“I’m down 25 percent,” said Larry Weber, president of Weber Commodities Ltd., who is forecasting 2.6 million acres of the crop.
Weber said lentils won’t be able to compete with red spring wheat prices, which are already at about $9 per bushel for new crop on the Minneapolis Grain Exchange.
“We are primarily a wheat growing province. It’s what we were bred to do. We will go wheat first and foremost,” he told the more than 900 Saskatchewan farmers attending Pulse Days 2011 during Crop Production Week in Saskatoon.
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Marlene Boersch, managing partner of Mercantile Consulting Venture Inc., agreed farmers are likely to reverse the long-running trend of swapping wheat area for lentils.
Wheat prices have jumped $2.65 per bu. over this time last year. The lentil price appreciation of five cents per pound has been modest by comparison.
Using average yields, wheat values are up $159 per acre versus $80 per acre for lentils.
Boersch anticipates a 15 percent decline in Canadian lentil plantings. She also expects the crop to lose ground to wheat in Turkey, Australia and the United States.
She advised growers to back away from lentils unless they can achieve a minimum $400 per acre gross return in their 2011 crop planning budgets.
Farmers should have sold 75 percent of their old crop by the end of January, holding 25 percent back to take advantage of rallies that will yet develop before the crop year closes.
Weber expects a carryout of 500,000 tonnes of mostly low quality lentils. Growers should consider holding onto their poor quality reds and greens in anticipation of better prices in the coming months and years.
He reminded growers that No. 3 and Extra 3 lentils were fetching 25 to 30 cents per lb. five years ago.
“I would be really reluctant to move anything below 20 cents,” he said.
Kevin Dick, president of All Commodities Trading Ltd., said farmers shouldn’t hold their breath in the short-term. The supply of low quality lentils is going to outweigh demand for at least two or three months because of dismal harvests in Canada and Australia.
Boersch has heard talk of new crop prices of 22 to 23 cents per lb. for red and green lentils but nobody is offering contracts yet.
Weber said growers need to see prices of 25 to 27 cents per lb. for reds before signing a contract.
New crop green prices need to be 30 to 32 cents per lb. to elicit grower interest.
Weber pointed out that it’s not just price that will drive acreage decisions. Wheat is a lot easier crop to harvest than lentils.
One bullish factor for lentil prices was Boersch’s skepticism about forecasts for 850,000 tonnes of Indian lentil production in 2010-11.
Analysts have focused on the big jump in minimum support prices for pulses in that country, but when those prices are converted into returns per acre, the chickpea and lentil returns are still well below wheat, barley and rapeseed.
“We are overestimating the Indian production, most likely,” she said.
Murad Al-Katib, president of Alliance Grain Traders, advised growers to stick to their rotations.
“We want to remind growers they have done well with the product,” said Al-Katib.
Lentils will be competitive going forward.”
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