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Duvenaud: Lentil markets hot, demand high for peas

WINNIPEG, Manitoba -- Green lentil markets are hot, as buyers grab the limited supplies of top-quality lentils. Green lentils generally have the same quality as last year, which wasn't the best. An inch or so of rain makes the supply of of No. 1 ...

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WINNIPEG, Manitoba - Green lentil markets are hot, as buyers grab the limited supplies of top-quality lentils.
Green lentils generally have the same quality as last year, which wasn’t the best. An inch or so of rain makes the supply of of No. 1 greens even tighter. A No. 1 Laird should bring somewhere in the low 40 cent range. A No. 1 Eston, if there are any, should bring high 30s.
Reds are steadier, fetching about 37 cents per pound freight on board, or 38 cents delivered.
Prices are up about 6 cents from this past spring, and have been fairly steady through harvest. Red markets are global markets with much of the strength coming from a below-average crop in India.
The Canadian crop this year probably will end up larger than last year. Plantings were up significantly, and though yields are down, production should be about 2.2 million metric tons, compared with 2 million in 2014. Red production will be about 1.7 million metric tons with about 600,000 metric tons of greens. Last year, there were 1.4 million metric tons of reds and 560,000 metric tons of greens.
Prices for lentils probably will start to ease soon. Once immediate shipping demands are filled, it could prove hard to sell 43-cent Lairds.
Lentils are one of many pulse crops, and prices will not maintain this premium forever. A lot of current demand will fade soon. Red prices might soften through winter.
Peas
Demand for yellow peas remains red hot. Bulk shippers (elevator companies) are moving out yellows in volume to China and everybody else is, more or less, on the sidelines. Independent processors can’t compete. There is little demand for container shipment.
This is a case where line elevators are working for the farmer. They’re paying more than $9 per bushel for a crop that probably cost you about $6.50 per bushel to grow. Elevators are taking all you can deliver and utilizing their ability to move large volumes efficiently.
Greens are another story. There isn’t a lot of demand for greens. It’s nearly fall, and green demand is strongest in winter, so neither Europe or South America has any immediate need. There is always limited demand for greens and, if anything, it seems to be easing. In addition, there are plenty of other suppliers of green peas.
It’s only recently that green markets have started operating. You should be able to find $7.75 per bushel delivered. That’s not what you want, but history tells us that holding supplies off a weak market rarely leads to better prices. Sitting on a stagnant market tends to stall everything.
Canola
Statistics Canada has canola production at 13.3 million metric tons, down from last year’s crop of 15.6 million. The survey came within analysts’ expectations, so this was no surprise to the market. Harvest is progressing rapidly across the prairies, with canola about 15 percent harvested. We expect aggressive farmer selling during the next couple weeks, which will pressure the market.
Canola prices continue to receive spillover pressure from the bean complex, and more specifically, from the sluggish world vegetable oil market.
It looks as if the weaker crude oil values, limited Chinese demand and the sharp year-over-year increase in U.S. soybean production could cause canola to grind lower through harvest.
Milling wheat
Statistics Canada has nondurum wheat production at 18 million metric tons, down from the 2014 crop of 21.2 million and sharply lower than 2013 production of 27.2 million.
The lower production estimate had little influence on the Minneapolis futures, as any shortfall in Canada is being made up from other major exporters.
There will be no shortage of rail capacity this year, given the sharp year-over-year decline of all major crops. U.S. import demand for Canadian high-protein wheat also will be down from year-ago levels because of a high-quality crop south of the border.
Despite adverse conditions this past spring, Ukraine and Russian wheat production will experience a marginal year-over-year increase in production and we have seen Black Sea origin wheat move into Central America and South America. These are traditional homes for U.S. and Canadian wheat. U.S. hard red spring wheat is expected to finish at 15.7 million metric tons, up from 15.1 million metric tons in 2014, and U.S. hard red winter finished at 23.2 million metric tons, compared with 20 million metric tons last year.
Durum
Statistics Canada’s durum estimate of 4.5 million metric tons is within trade estimates. Quality reports suggest the crop will be good quality, coming on the heels of a higher-quality and larger French crop. We are not going to see strong demand from the U.S. millers, as experienced last year.

Duvenaud publishes the Wild Oats Grain Market Advisory. For a free copy, call 800-567-5671 in Western Canada and North Dakota. All others call 204-942-1459.

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