Last week’s GrainCents Weekly Digest reported that ample supplies of red lentils continue to pressure prices. Comparably, green lentils prices, due to better market prospects, remain steady.
This week’s message is not any different price-wise. We find that red lentil prices in India are not rallying. In a similar capacity, red and green lentils prices in Saskatchewan are flat week-over-week.
A quick recap of the developments on the lentils market this week reveals some bullish, but some bearish things about this long-battered market.
On the positive side, Turkey continues to be a healthy destination for Canadian exports. With India out of the market, Turkey and the US are quickly becoming the go-to options for Canadian lentils.
Also, on Friday, May 11th, we got Statistics Canada’s estimates for grain stocks through March 31st, 2018. Specific to lentils, there are still 1.5 million tonnes available as of the end of the first calendar quarter. This is up 35% both year-over-year and from the five-year average.
Lentils held on farm still are sitting a little more than 1.35 million tonnes. This is 41% more than last year’s 970,000 tonnes held by farmers, but also 36% higher than the five-year average. Comparatively, lentils held in commercial storage as of March 31st came in at roughly 168,000 tonnes, 25% more than the five-year average.
The StatsCan report can be viewed as slightly bearish as Canadian old crop lentils stocks are heavy. Hence, with ample supply, the upside potential for lentils prices remain relatively limited at this time.
The USDA’s crop progress report released on Monday, May 7 indicated that roughly 22% of the lentils crop has been planted thus far in Montana (which is responsible for 2/3s of all American lentils acres this year). A year ago, the total lentils seeding progress across the state was pegged at 46%. The 4-year average came in at 49%.
This year is starting to look like 2014 when seeding was delayed in the Northern Plains. By May 20th of that year, 73% of Montana’s lentils crop was seeded. In the subsequent two weeks though, through June 3rd, 97% of the Montana lentils crop was in the ground.
Heading north to Canada, this week’s Saskatchewan crop report showed 9% of all crops are in the ground thus far. While it’s indeed progress, it is behind the 5-year average of 19% and last year’s progress of 11% planted. Specific estimates on the lentils planting progress in Saskatchewan were not reported this week.
Next door in Alberta, roughly 8% of the province’s crops have been seeded, up from less than 1% reported the week before. Back in 2013, nearly 87% of the lentils crop was the ground by the May long weekend and virtually completed by June 4th. Lentils acreage in Alberta certainly has a long way to go.
This in mind, after last year’s drought, the question of precipitation (and thus, soil moisture) is a pretty important one. At least one forecaster that we follow is seeing weather models for the Canadian Prairies that are similar to 1986, 2001, 2006, and 2012 (all pretty dry years). This doesn’t mean you should lock your bin doors just yet, but it’s something to be cognizant of.
To sum up, the outlook for the lentils turned a bit more bearish this week. StatsCan confirmed heavy lentils ending stocks. Although Canadian lentils exports are down, traditional buyers for Canadian lentils such as Turkey are increasingly taking on the lost market share of India. Other buyers such as the US are quickly becoming a go-to option. Further, the progress of the lentils planting in Western Canada and south of the border in Montana are important factors to watch in the next weeks.
For old crop 2017/18 lentils, we are at 80% sold on both 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
May 10 – An Estimated 410,225 MT of US Lentils Production in 2018
May 6 – Lentils Weekly GrainCents Digest
April 29 – Lentils Weekly GrainCents Digest
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