Before Martin Chidwick got to the meat of his presentation on the outlook for lentils, he had a few things to get off his chest.
Chidwick, who was a speaker at Crop Production Week’s Pulse Days seminar, had some advice for the growing number of farmers who are trading their own pulse crops.
Don’t shoot yourself in the foot.
In the text of a speech he delivered to the Pulse Days crowd, the Xcan Grain trader cited an example from last summer of how one bad trade can harm the entire industry.
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He said trade for Eston lentils to Morocco was undermined by a company that acquiesced to pressure from a major buyer in that country. The buyer was able to get his purchase price renegotiated to reflect the weaker post-harvest price in Canada.
“It took just one company to capitulate and the rest to follow suit for a weaker value to impact Canadian on-farm values.”
Chidwick also criticized the industry as a whole for being too forthcoming in providing information to international customers.
“Right now I contend we tell our competition and our markets too much.”
Publishing and boasting about Canada’s ever expanding pulse production numbers can promote aggressive bargaining by buyers and drive down prices, said Chidwick.
The way the industry reacted to the Port of Montreal labor disruptions had a similar effect. Buyers sensed the panic and urgency to get the dispute resolved and they “ran away.”
He also questioned whether the proliferation of farmer-owned processing facilities on the Prairies is driving down prices for pulse crops.
“Do these facilities like lower prices because they facilitate more product through their plant? I have witnessed several instances this year where the integrity of a market value has been denuded by the actions of a processing company looking for a sale at any price.”
After beseeching producers to think of the big picture rather than their individual circumstances, Chidwick discussed lentil supply and demand and his forecast for prices.
Canadian lentil farmers produced 914,000 tonnes of crop in the 2000-2001 growing season, up from the previous crop of 724,000 tonnes. Carryout will amount to about 172,000 tonnes, double what it was the previous year.
Chidwick is forecasting 860,000 tonnes of lentil production in 2001-02. Exports will be down slightly leading to higher carryout stocks of 232,000 tonnes.
His price outlook for top quality large green lentils is 14 to 16 cents per pound. Medium and small green lentils should fetch between 12 and 14 cents per lb. Growers who produce French green lentils can expect about 13 cents per lb.
Red lentils are the toughest to peg, with a range between 10 and 18 cents per lb. India, the largest producer and consumer of red lentils, is having a significant drought this season. That could lead to increased imports of reds, but India also has a penchant for buying cheaper pulses when domestic lentil production falls short.
