Big lentil crop in 2013Canada had a big lentil crop in 2013 — 1.881 million metric tons, according to AgCanada — but it’s moving well.
By: John Duvenaud, Agweek
WINNIPEG, Manitoba — Canada had a big lentil crop in 2013 — 1.881 million metric tons, according to AgCanada — but it’s moving well. Statistics Canada reports that a record 600,000 metric tons of lentils were exported last fall. Shipments were down to India but strong to Turkey and the Middle East.
Reds made up the bulk of Canadian production with more than 1 million metric tons.
This is a big global market that always trades. Demand for Canadian red lentils has been, and continues to be, solid and steady. There’s no sign of any slowdown in red demand and markets should have good support through the end of the crop year.
There was a big crop of Lairds, as well — 645,000 metric tons. The carry-in is finally down to reasonable levels so total Laird supplies are only 875,000 metric tons. That carry-in, however, doesn’t compete for the top quality market, so supplies might be a bit on the tight side.
Seed size is an issue with the 2013 crop. Yields were fabulous and the downside is that seed size is smaller than normal. Seed size is normally not an issue with Lairds but it only took the first few loads of deliveries this fall before processors started routinely sizing their Laird purchases. They have to size them to get product suitable for high-end buyers. Perhaps 20 percent of Lairds grade A No. 2 on size and there are lots of undersized No. 1s. On average, about 80 percent of Laird samples pass over a 15/64 screen. You should be able to negotiate a premium if 90 percent of your Lairds can pass over a 15/64 screen. It’s even better if 95 percent pass over. By the same token, if your lentils are more than normally undersized, they’ll be discounted.
Prices aren’t great, but they’re decent. The slumping Canadian dollar (91 cents today compared with 96 cents in September) is helping.
Top quality No. 1 Lairds trade at 21 cents per pound. That would usually be a Spanish large. Standard No. 1 Lairds trade around 19 cents. No. 2s are 17 to 18 cents per pound. No. 1 Richleas are 17 to 18 cents. Estons are 16 to 17 cents. Reds trade at 19 to 20 cents per pound.
The South American market for green lentils is in prime consumption season now and demand is steady.
New-crop lentils may come under pressure. It’s probable that Canadian plantings will be higher. It also appears that India has planted a large winter crop. Seeding is just wrapping up and was a record for total pulse area — more than 40 million acres. There are new crop red bids available at 17.5 cents on deferred delivery contracts.
There are few green new crop bids.
Limited movement weighs on canola
Canola futures made fresh contract lows the week ending Feb. 14 as the commercial pipeline remains plugged and limited movement off the West Coast tempers export potential. In the past two weeks, grain companies were told they would only be allocated a certain amount of rail cars from now until Dec. 31. Therefore, despite the lower prices, export business will be capped and the farmer will be forced to hold stocks into the new crop year.
We continue to forecast a carryout of nearly 3 million metric tons, of which 2 million metric tons will be stored on-farm as of July 31. Prices are expected to trend lower in the next couple months and canola will remain divorced from the soybean complex because of the burdensome stocks.
The market is functioning to encourage demand, but despite the lower prices, we will not see additional business. This is a very unique problem for the Canadian commercial system. Basis levels will remain relatively wide until the end of the crop year. Looking forward, we are anticipating a year-over-year increase in Canadian canola acres by 5 to 7 percent and the market will start to focus on new crop production later in spring. It appears that Canadian canola stocks will remain burdensome for the upcoming crop year, as well.
New-crop milling wheat and durum
The Canadian grain industry has gone through a fundamental transition.
Each company will be allocated so many rail cars each week from now until the end of the year. Therefore, producers that want to deliver at harvest have to sign up now so the companies reserve space for the individual producer.
At this time, there are no problems with the Northern Hemisphere winter wheat production. At the same time, we are anticipating similar spring wheat acres in Canada and a slight increase in U.S. hard red spring acres. If average yields materialize, Canadian hard red spring wheat stocks will remain above the 10-year average in the 2014 to ’15 crop year and the market will continue to grind lower. Basis levels in the elevator system will remain relatively wide as it looks now.
It is important to note that we need a major drought in North America to change our outlook on the wheat and durum market. At this time, the trend in the weather pattern is for normal to below-normal temperatures and normal to above-normal precipitation. Therefore, it looks like durum and spring wheat prices will remain under pressure into the new crop year.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 1-800-567-5671, e-mail email@example.com or visit canadagrain.com.