Canada: Red lentil crops might be getting smaller

There could be upside in red lentil markets, says an analyst.

“I can see more of the bullish factors rather than the bearish news,” AgPulse Analytica analyst Gaurav Jain said at the Global Pulse Confederation’s (GPC’s) recent Macau Pulses Congress.

The market has already factored in big crops from Canada and Australia, so most of the bearish news has been absorbed.

Something needs to happen to jolt the market out of its current doldrums and he thinks that is likely to be a bullish factor, such as a worse-than-anticipated Australian crop.

The Australian government is forecasting 1.7 million tonnes of production. Some analysts were thinking it could be as high as two million tonnes.

But Jain said it could be as small as 1.2 million tonnes as growing conditions deteriorate in that important production region.

Peter Wilson, a trader with Louis Dreyfus Company, said conditions in Western Australia are adequate, there are good yield prospects in the northeast, but Victoria and South Australia are very dry.

He agrees that production could be as low as 1.2 million tonnes.

“That’s quite a drop in potential,” he said in a recording of the GPC’s Sept. 11 Lentils Panel discussion.

Canada’s final harvest numbers could also prove disappointing.

Jain is forecasting 2.69 million tonnes of production, up from 1.8 million tonnes last year.

Will Watchorn, a trader with Viterra, thinks that estimate is 400,000 to 500,000 tonnes too high because it stopped raining in Canada late in the growing season.

But that also delivered some benefits.

“The quality we have this year is once again excellent,” he said.

Jain is forecasting 900,000 tonnes of Canadian green lentil production, up from 565,000 tonnes last year. Watchorn thinks it is closer to 700,000 tonnes.

Either way it’s a big crop that is putting downward pressure on prices.

“We have already seen prices of green lentils coming down sharply,” he said.

Jain is estimating 402,000 tonnes of U.S. lentil production and 250,000 tonnes of exports in 2024-25.

“Supply is higher than demand for greens this year, both from the U.S. and Canada,” he said.

That is why he is forecasting “further downside” for that class of lentils.

Harsha Raj, a buyer with Mayur Global Corp., said green lentils substitute for pigeon peas in the Indian market and the stocks of pigeon peas are “negligible” at this time.

She noted that a lot of lentil purchasing has already taken place.

“The next round of buying will depend on what kind of production we see for pigeon peas this year,” said Raj.

Stat Publishing editor Brian Clancey recently shared some thoughts on that in an article on the Stat website.

He believes India could produce 3.7 million tonnes of pigeon peas this year if yields were average. That would be up from 3.39 million tonnes last year and 3.31 million tonnes the previous year.

But yields might well be above average due to excess monsoon rains.

“Given prospects for improved pigeon pea production this season and increased cross commodity competition for demand, there is a risk India’s green lentil imports will ease after December,” said Clancey.

Jain is forecasting 4.4 million tonnes of Indian pigeon pea production, which would minimize the replacement demand for green lentils.

“The prospects are looking much better than last year,” he said.

In addition, he estimates the country produced 1.62 million tonnes of lentils that were harvested in March/April.

The government is sitting on an estimated stockpile of another 808,000 tonnes of the crop.

“India right now does not need much more lentil imports,” he said.

He is forecasting 1.15 million tonnes of imports for 2024-25, down from 1.68 million tonnes the previous year.

Raj is not as pessimistic. She thinks India’s crop was smaller than 1.62 million tonnes.

She also noted that desi chickpea prices are on the rise in India due to a “huge shortage” of that class of lentils.

“We will definitely see red lentils going as a chana (desi chickpea) substitute,” said Raj.

She said imported stocks of red lentils are less than 100,000 tonnes, which is very low.

The market is relying on the government’s buffer stocks and strong red lentil planting in the upcoming rabi season.

Russia, Kazakhstan and Turkey are the other big players in the lentil market.

Jain is forecasting 360,000 tonnes of exports from Russia in 2024-25 and another 250,000 tonnes from Kazakhstan.

Lika Khoptyanets, a trader with Exim Asia, said harvest in Kazakhstan was late this year due to persistent rainfall.

She estimates that 60 to 70 percent of the crop is reds, with the remainder greens.

“We are very worried about the quality,” said Khoptyanets.

There are more problems with wrinkling and staining than usual.

Yusuf Memis, a trader with Bashan, estimates that 55 to 60 percent of Russia’s crop is green lentils, with the remainder red.

He said the Black Sea crop comes off earlier than those in Canada and the U.S. and helps fill the supply gap at that time.

Memis said Turkey produced enough lentils to satisfy its own domestic demand of about 300,000 tonnes.

But the country does another 450,000 tonnes per year of “transit business,” importing lentils, processing them and shipping them out to customers in the region.

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Tags: Australia, exports, harvest, prices, Canada, Production, crop, red lentil, markets