Nov. 25 – Lentils Outlook Starting to Look Brighter?

There is a bit of a contrarian nature to the lentils outlook if we think more long-term. The challenging part is, indeed, getting through the short-term.

Current Sales Position:

We are 0% sold on both red AND green lentils for old crop 2018/19 lentils.

We are 0% sold on both red AND green lentils for new crop 2019/20 lentils.

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While they’ve been consistently putting out new crop updates, the Indian government did not publish a crop situation this week. We do know though, that from November 16th, lentil acreage was tracking 18% behind last year’s pace. Regardless, with the slower pace, it’s looking like India’s rabi pulse crop could be smaller than the Indian government is currently forecasting.

While this might change should late monsoon rains materialize, the outlook for this to happen isn’t too high. This in mind, the large carryover of India’s 2017/18 pulse stocks will have to be dipped into more aggressively.

Simply put, this past week there has been more headlines from analysts around the world supportive our narrative from last week that the smaller rabi crop could lead to India becoming a net importer of pulses yet again. The key point here though is the tariffs might not be lowered, even if more imports are needed to satisfy the demand of the world’s largest consumer base of pulses.

Global Lentils Outlook

Lentil prices in Australia have been trading around in a range of $248 to $283 USD per MT (or the rough equivalent of 11¢ – 13¢ USD or 15¢ – 19¢ CAD per pound. This is mainly attributed to heavy carryover of stocks from the 2017/18 crop year and the lack of Indian demand.

More specifically, Australia is said to be sitting on about 300,000 MT off lentils from last year, a number that would likely be bigger if we didn’t see such strong feed demand and a drought in the Land Down Undaa this year. Still without a strong export function, it’s expected by a few analysts in Australia that lentil prices will remain depressed until India signals some sort of demand (as previously mentioned).

One country buying more Aussie lentils is Bangladesh, but they’re also buying from Canada. Rounding out Canadian demand includes Mexico, Turkey, and even India, albeit, obviously in lower volumes than years past. Mexico is also buying more American lentils, but the EU is also competing for American product this year.

AAFC notes that premium of large green lentils compared to small reds has is about a third of what it was a year ago, moving from an average of $340 CAD / MT in 2017/18 (or 15.5¢ CAD per pound) to $110 today (or 5¢).

Sidenote, we’ll get a crop production from ABARES on Tuesday, December 4th, followed by Statistics Canada’s own update two days later on December 6th.

Lentils Exports This Week

Through Week 16 of the 2018/19 crop year (ending November 18), Canadian lentils exports are sitting at a total of 140,600 MT, up 54% year-over-year.

Lentils Outlook - Canadian Exports Going Well

For Week 16 specifically though, Canadian lentils exports totalled 1,500 MT

Week 16 Canadian Lentils Weekly Exports

While it’s certainly positive to see this sort of strength compared to last year, we also know that there wasn’t much to compare things to a year ago at this point. While we have slowly but surely seen prices grain some traction, the lentils outlook going into 2019 is certainly less acres.

Like durum, it’s expected that more spring wheat, barley, oats, and canola will find a big role in the rotation in 2019. Thus, there is a contrarian nature to the lentils outlook if we think more long-term. The challenging part is, indeed, the short-term.

To growth,

Brennan Turner
CEO
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306-715-4540 (cell)
b.turner@farmlead.co

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FarmLead – North America’s Grain Marketplace

GrainCents

Nov. 18 – Lentil Prices Focusing in on India’s Rabi Crop

Nov. 13 – Are Lentil Exports the Anomaly of Pulses?

Nov. 4India’s Lentil Import Tariffs Raised Yet Again

Oct. 28 – Lentil Prices Continue to Look to India

Oct 21 –  AAFC Raises Lentils Exports to 1.9 MMT

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.