Canada takes reins after poor Aussie lentil crop

Canada is back in the driver’s seat in the red lentil market, according to pulse industry executives.

It has managed to wrestle the steering wheel back from Australia after spending two years in the back seat.

“Australia was your price-maker and Canada your price-taker,” Mostyn Gregg, vice-president of grains and pulses with Olam, said during a recent Global Pulse Confederation (GPC) webinar.

However, drought has returned to the country, which is likely to result in a disappointing crop of about one million tonnes, down from 1.57 million tonnes last year and 1.69 million tonnes the year before that.

There was plenty of optimism early in the growing season, with analysts forecasting as much as two million tonnes of production.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) was still calling for 1.7 million tonnes in its September crop report, but that number now appears to be wildly optimistic.

Gregg said it is reminiscent of Canada’s dismal 2021 crop when production plummeted to 1.59 million tonnes from 2.87 million tonnes the previous year.

“I think we’re seeing something similar here,” he said.

That should bode well for prices, but it hasn’t due to India’s onerous stocks, lacklustre demand from Turkey and good crops in Canada and Russia.

Mitchell Elks, a trader with AGT Foods, said the crop was looking decent up until two months ago despite the lack of moisture.

However, then it got hit with a killing frost, with temperatures dipping to -5 C for an extended period in South Australia and parts of Victoria.

He is concerned about Australian growers holding out for better prices while Canadian growers are busy marketing their 1.6 million tonnes of red lentils.

“Certainly, Australia will now take the back seat,” he said during the GPC webinar.

Buyers who want to pry red lentils out of the hands of Australian farmers will have to pay a premium.

Elks said Australia will likely still service markets in India, Bangladesh, Pakistan and the United Arab Emirates, but it will likely lose markets like Egypt and Turkey to Canada.

Gregg believes that with carryout there will be one to 1.2 million tonnes of Australian red lentils available for export, down from about 1.7 million tonnes in the crop year wrapping up. How much of that gets shipped depends on the growers.

“It’s going to be difficult to pull those lentils out of a disengaged grower’s hands,” he said.

It’s an entirely different story for the desi chickpea crop, which is grown in areas of Australia that received ample rainfall.

He thinks growers could harvest two million tonnes of the crop, up from 491,000 tonnes last year and 541,000 the year before that.

The analysts believe ABARES is dead wrong with its September forecast calling for 1.3 million tonnes.

Elks just spent three weeks driving around Australia’s main chickpea growing areas.

“It’s some of the best crops I’ve even seen,” he said.

There were fields above his knees with 70 to 90 pods per plant, each containing at least two seeds with 10 to 20 per cent housing three seeds.

Elks believes the crop will easily reach two million tonnes if it gets another 10 to 20 millimetres of finishing rain.

Australia’s desi chickpeas could help fill the void in India that is being met in part by Canadian yellow peas.

Peter Wilson, head of Australian pulses with Louis Dreyfus Co., said the crop is reminiscent of the record 2.4 million tonnes harvested in 2016-17.

However, there are big logistical differences between the two crops.

Containers did the heavy lifting in 2016-17, but container freight rates are too high this year and Australia does not have the bulk capacity to move that big of a crop.

Wilson said it is going to be a “tough ask” to get Australia’s chickpeas to market during this pre-Ramadan window.

Elks agrees that transportation logistics will be a massive challenge this year.

“Containers are exceptionally difficult to get,” he said.

If Ramadan was further out on the calendar it might be workable, but it’s not.

“You’ve got front-end demand from everybody,” he said.

Elks estimates 400,000 tonnes of desis have been forward sold for the October to December period, but he believes exporters will have a tough time executing on those contracts.

Gregg was asked if India will extend its import tariff exemption on desi chickpeas past March 2025.

He said that depends on India’s crop, noting that it has an excellent moisture profile right now.

Elks agreed that there appears to be a decent crop coming in India due to above-average rainfall.

He wonders if India will put the tariffs back in place if Australia dumps 400,000 to 500,000 tonnes of desis on its doorstep in the January-February-March period.

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Tags: demand, red lentil, Australia, prices, Canada, Production, drought, crop, stocks, Market