This past Friday, on April 27, Statistics Canada released its farmer-survey-based results of 2018 acreage intentions of Canadian farmers. Going into the report, the market was expecting to see a number from StatsCan between 3 and 3.85 million acres of lentils.
Instead, StatsCan surprised the entire market, saying that they expecting Canadian farmers to plant 4.05 million acres of lentils in 2018/19. This is down 8% from the year before, but a much larger drop was expected by many, including us.
According to the StatsCan report, farmers in Saskatchewan will cut their lentils acreage by 330,000 acres, or 8%, to just under 3.6 million acres. Next door in Alberta, farmers are dropping about 30,000 acres of lentils, to sit at about 460,000 acres getting seeded in 2018/19 (or down about 5% year-over-year)
With the number coming in above expectations, it’s easy to view this report as bearish for lentils prices. At the time of writing though, we didn’t see too many bids that looked at the bearish report and dropped their bids substantially. In fact, lentils prices in Western Canada seem to be holding well, with green lentils earning the best support for current values.
Thus, perhaps we’re seeing a significant switch out of red lentils acres in 2018, and instead of that part of the rotation going to another crop, it’s going to green lentils instead? We’d believe it if you told us that you were doing that.
While, fields are moving from red to green, some Canadian lentils are moving in general! CGC data updated for Week 38 (ending April 22) showed weekly exports of 16,400 tonnes, one of the best weeks in recent memory!
Further, we know that there are fewer lentils acres going to be drilled by American farmers this year. As a reminder, the USDA said on March 29th that said American farmer will seed just 791,000 acres of lentils in 2018/19. This would be more than 300,000 acres (and 28%) below 2017/18’s US lentils acres but more than 155,000 acres (or 25%) above than the five-year average of 634,600 acres.
Ultimately, this means that we’re looking at nearly 5 million acres of total acres attributed to lentils in 2018/19 in Canada and the US combined.
For Canadian farmers specifically though, with India basically out of the market, and the market signalling lower price points, it’s clear that this decision to plant more lentils in 2018/19 is, like durum, not necessarily a broader play on the macrostructure of the market, but rather an act on the situation that we’re presently in: lack of soil moisture (or rather the concern of it).
While we’ve certainly gotten some good dumps of snow in the past few weeks, it doesn’t necessarily guarantee a replenishment of the soil moisture that was so significantly depleted last year in Western Canada.
Moving forward, we’re going to be looking more closely at soil moisture and precipitation in Western Canada to get a better understanding where this market may pop up to on weather alone.
For old crop 2017/18 lentils, we are at 80% sold on red AND green lentils.
For new crop 2018/19 lentils, we remain 0% sold on both red and green lentils.
Have a great week!
– Brennan, Garrett, and Adrian
April 27 – StatsCan Expects 4.05 Million Acres of Lentils in Canada in 2018/19
April 23 – Your Lentils Are Indeed Going Into Your Bread
April 22 – Lentils Weekly GrainCents Digest
April 18 – Who’s Running The Show for US Free Trade?
April 16 – How Will India’s 2018 Monsoon Rains Impact Lentils?
April 15 – Lentils Weekly GrainCents Digest