Canadian lentil slump not enough to save prices

Lentil prices dropping in spite of big write down in Canadian production


Australian lentil producers are looking at crops with good potential in general this season, but prices have come back on last year.

Australian lentil producers are looking at crops with good potential in general this season, but prices have come back on last year.

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Lentil prices are unlikely to kick to last year's levels, in spite of a substantial year on year fall in production in Canada.

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A WHOPPING 29 per cent year on year drop in lentil production in Canada, the world’s biggest lentil exporter, will not be enough to combat a significant price fall in the pulse crop.

New crop forecasts for lentils delivered to packers are at around $530 a tonne, compared to levels that poked through $800/t at times last season.

Veteran pulse industry broker Peter Semmler, Agrisemm, said improved crop prospects in the subcontinent, combined with significant levels of stored product in India would likely conspire to keep a lid on price levels.

“Buyers bought so much crop from both Australia and Canada last year and they have to work their way through these stocks,” Mr Semmler said.

“There may be issues with the Canadian crop but the market is obviously comfortable, it is not like anyone is having their door smashed down for offers.

“This compares to around this time last year when everyone was frantic writing forward contracts.”

Dry Canadian conditions, in particular in Saskatchewan, Canada’s largest lentil producing region, are estimated to drop to 2.29 million tonnes, down from 3.25mt in 2016.

Mr Semmler said the Australian story was less easy to predict.

“There were some issues early in key production areas in South Australia, in places like the Yorke Peninsula, but seasonal prospects have turned around.

“They certainly aren’t on track for a record crop, but nor is it a disaster.”

In the other major lentil producing state, Victoria, Mr Semmler said a combination of a massive plant and good seasonal prospects meant Victorian production was likely to be the highest on record.

“We are seeing a lot more lentils planted up in the Mallee and that is really boosting overall production there.”

His opinion was backed up by Mallee farmer Ian Hastings, Ouyen.

“We’ve got a lot more legume crops in overall this year and lentils are a big part of that,” Mr Hastings said.

“The crop looks very good at present.”

On the Victorian- South Australian border, Kaniva farmer Malcolm Eastwood said lentil crops, traditionally not fans of wet conditions, had handled the damp finish to winter relatively well.

However, he said the drop in prices was concerning.

“We are at around $500/t now when it was $700/t in March,” Mr Eastwood said.

“The drop in price changes the dynamic in terms of what your chances of producing a profitable crop are, it becomes that bit more risky.”

Mr Semmler said market signals had been clear there was no great appetite for lentils at present.

“You would think with a million tonnes shaved off the Canadian crop there would be some activity, but it has stayed quiet.”

He said there were reports of the US doing business with Turkey, with lentils going there for around $US530/t.

“It is back significantly on last year.”

He said an area to watch would be variety based demand.

“There may be some support from markets that have a specific demand for an Australian variety, or for high quality product, but it will be a case of looking for opportunities as they arise in that space.”

Mr Semmler said while prices had come back they were still well above the median for lentils.

“Back in the 1990s if farmers got $400/t in their pockets they were delirious, so prices certainly aren’t bad.

“It is just now, after a couple of boom years in terms of pricing, farmers now need to be careful and have things go right, both agronomically and in terms of marketing, the margin for error has closed.”

“At $700/t you could miss the market highs by $20/t and it didn’t matter too much, at $500/t you are a lot closer to the cost of production.”

Mr Semmler said he felt the current price would be around the seasonal low.

“There isn’t much there to say prices will drop dramatically lower from here.”

He said substitutability with widely produced Indian crops such as matpe beans (urad dal) and mung beans was a contributing factor in driving prices down but said overall supply and demand did not warrant a big fall in price.

It is better news for Australian kabuli chickpea producers, who struck gold with prices in excess of $1600/t last year.

Mr Semmler said both American and Canadian crops were down this year and added chickpeas were less easy to substitute with other pulses.

“In terms of the large, 9mm kabuli type chickpeas, current prices are in excess of $1400/t.”

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