Canada’s main competitor in the red lentil market is harvesting a huge crop, but that won’t result in a bigger export program, according to an industry official.
Mostyn Gregg, a trader with Agrocorp International in Australia, recently told the Global Pulse Confederation that he anticipates one million tonnes of Australian production.
That is well above the official government forecast of 616,000 tonnes and nearly double last year’s crop of 534,000 tonnes.
Gregg is basing his forecast on 926,000 seeded acres, a 17 percent increase over last year. By contrast, the government believes farmers increased plantings by a mere two percent.
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“Because of China’s imposition of a tariff on barley in April, a lot of barley hectares switched to red lentils,” he told the GPC.
“If anything, I would say my area estimate is conservative.”
The good news for Canadian exporters is that Gregg doesn’t anticipate any increase in Australian red lentil exports in 2020-21 for a variety of reasons.
Australia shipped out 700,000 tonnes of the crop in 2019-20. Demand was extremely strong due to COVID-19.
He is forecasting 650,000 tonnes of exports in 2020-21. The modest decline is due in part to the minimal amount of carryout supplies from the previous year.
Greg Kostal, analyst with Kostal Ag Consulting, had a different way of putting it.
“Australia got sucked dry,” he said.
Gregg said Australia’s harvest is also later than usual. The crop kept re-podding, which boosted yields but dragged out harvest, setting back the export program by about six weeks.
“It’s a massive issue because everyone wants the front end,” he told GPC.
In addition, Australia is suffering from the same container shortage issue as Canada.
“This is the worst execution year I’ve ever had. It’s a disaster,” said Gregg.
Kostal said the market has already factored in a large Australian crop. That is part of the reason why red lentil prices fell to 25 cents per pound from 29 cents in the fall.
Prices have rebounded somewhat in January due in part to the logistical problems Australian exporters are facing.
“It has allowed Canada to regain its competitiveness,” he said.
But eventually Australia is going to provide stiff export competition in key markets like India, Turkey and Bangladesh.
All eyes are going to be on India, a market that sets the tone for red lentil demand.
Red lentil carryout from India’s 2019-20 crop will be minimal. The government said growers harvested 1.18 million tonnes of the crop that year, but the trade believes it is closer to 750,000 tonnes.
The government was hoping for an acreage increase in 2020-21, but Kostal doesn’t think that happened because prices at planting time were at or below the government’s minimum support price for the crop.
With better yield prospects, growers might be able to produce 1.25 million tonnes of red lentils, which is well below India’s annual consumption of two million tonnes.
“India needs lentils in calendar 2021,” he said.
He is forecasting 750,000 tonnes of imports, down from 1.1 million tonnes in 2020.
“It’s certainly less but not a complete shutout,” said Kostal.
When India is perceived as an “import threat,” that tends to prompt other importers to buy sooner than they normally would, he said.
Kostal anticipates India will lower its lentil import tariffs a couple of times in 2021 once it has chewed through its own domestic supply.
He will be keeping a close eye on India’s domestic prices, which will provide clues as to when the tariff reductions are likely to occur.
Contact sean.pratt@producer.com
