Lentil markets are heating up despite a 47 percent increase in domestic production.
“The prices have definitely been rising over the last six weeks or so,” said Murad Al-Katib, president of Saskcan Pulse Trading Inc., one of Canada’s top lentil exporters.
Green lentil prices have firmed up by a few cents per pound, but the demand is a bit delayed for Lairds because European buyers stocked up on large greens last fall because of uncertainty over this year’s crop prospects.
The real action has occurred in red lentil markets, which recently topped 20 cents per lb. for the first time in about three years, he said, primarily because of poor export prospects in competitive regions. Turkey’s production has been “sucked up” by domestic consumption and spillover demand from Iraq.
Read Also
Soybean market still figuring out implications of China-U.S. pact
Soybean futures had a muted reaction to the U.S. trade deal with China as the market tries to figure out the nuances of the deal.
“They just really haven’t had a lot of other supplies to export beyond very near markets.”
As well, Australia hasn’t been the dominant force it usually is in the Far East. By some estimates, its lentil crop came in at 60 percent of forecast levels.
“The Australian new crop of reds was not nearly as strong as they first predicted,” Al-Katib said.
Tight supplies in Turkey and Australia combined with strong demand from the Indian subcontinent and North Africa bodes well for Canadian growers.
“We’re predicting continued movement for all types of lentils.”
He said the only problem is buying product from Canadian producers, who appear to be holding on for better prices.
That’s not a strategy Jim Hansen is employing. The farmer from Yellow Grass, Sask., is selling all his large green lentils at prevailing prices because he believes markets are heading down.
Last year he sold poor quality Lairds for 23-25 cents per lb., but this year he’s willing to accept 191/2 cents for No. 1 Lairds.
“I think most farmers are very happy with today’s price,” said Hansen, who believes last year’s prices were too high.
“They’re pretty decent and I think it’s as good as it’s going to get.”
His decision to sell into the price rally is based on the fact that Canadian growers harvested 520,000 tonnes of lentils in 2003, up from 354,000 tonnes the previous year.
Despite his suspicion that prices are on their way down, Hansen expects seeded acreage will rise again this spring.
“Compared to the other crops it’s still one of the better ones economically to be growing.”
Lentils break up the cereal and oilseed disease cycle, use less fertilizer and mature earlier than other crops, which are all reasons why Hansen plans to grow 500 acres of lentils this year.
Al-Katib said lentil production will also increase this year because they are an ideal dry weather crop.
“Red lentils need water twice, once when you seed it and (once) when you boil it to eat,” he said.
“I think we’re going to see an increase in seeded acreage in Canada and the market demand in the world will be able to absorb that.”
But he disagreed with Hansen about where prices are headed.
“The outlook for lentils in general is very, very good.”
