The absolute disappearance of demand for lentils on the global market along with the huge jump in seeded area for Canada’s crop does not bode well for values in the cash market.
“Prices for lentils are likely to continue to trend downwards in this kind of environment,” said Colin Young, manager of R. Young Seeds at Mortlach in southern Saskatchewan.
Demand for red lentils in particular has vanished, he said.
“Buyers in the importing countries such as the Middle East and North Africa are essentially paralyzed, meaning they are scared to do anything at this stage of the game,” Young said.
The lack of demand on the world market for lentils in general is tied to the pending large harvest of that crop in Turkey and Syria.
“The harvest of the lentils in those two countries is on the horizon, possibly as little as 80 days away,” Young said. Output of Turkey and Syria’s lentil crop normally average about 400,000 tonnes, but this year the crop could be up from that level.
Buyers will be especially watching what the government of Turkey will do with domestic rules governing lentils, he said.
“There are ideas the Turkish government could restrict lentil exports in order to supplement domestic warehouse supplies, but they could also allow exports in hopes of drumming up some much-needed cash flow,” Young said.
Turkey’s exporters will look at the world price for lentils, and then lower their bids in hopes of drawing in the business – which means “the bids that Canadian lentil shippers can get will take a further downward hit,” he said.
Buyers of lentils are also looking at Canada’s acreage base for lentils and thinking that there will be no shortage of supply come Canada’s harvest time.
“These buyers have been gathering supplies on a hand-to-mouth basis, and there is no reason to change that pattern given the supply outlook,” he said.
Statistics Canada’s April 26 crop survey pegged Canada’s lentil area at 2.875 million acres, surpassing the 2009 level of 2.4 million. There were ideas that once the dust has settled, lentil area in Canada will be larger than what the government agency indicated. Private estimates have 2010 lentil area in the three million-to 3.2 million-acre range.
Young said conditions for growing lentils in Western Canada were almost ideal and could result in yields in 2010 easily coming in above the 1,000-to 1,100-pound per acre level seen in 2009.
Based on Prairie Ag Hotwire data at the end of April, bids for No. 1 Laird lentils delivered to the elevator currently range from 30 to 32 cents per pound; No .1 Estons, 24.5 to 26.5 cents; and No. 1 crimsons, 25-27 cents.
New-crop bids for No. 1 Lairds were in the 18.5-to 21-cent per pound range; No. 1 Estons, 18.5-20.5 cents; and No. 1 crimsons, 20.5-21 cents.