WINNIPEG, Manitoba -- Lentils are always trading, but prompt delivery is another story. Exporters report limited global demand. Only Spain is a solid customer. Most buyers are going slowly. India has pretty much stopped buying. Reds are the only lentil that are showing any strength and some of that comes from shipping problems in Australia, currently harvesting.
The country, like most grain exporters, is having logistical constraints, and some buyers are coming to Canada as an alternative. Unfortunately, this new business is generally for prompt shipment, which means most has to be turned away.
There's little upside in lentil markets. India had a good crop and is becoming a less important importer every year. Canada had a big crop -- 1.88 million metric tons, mostly good quality. There were 645,000 metric tons of Lairds, 38,000 metric tons of Richleas and 170,000 metric tons of Estons.
Reds are dominant with more than 1 million metric tons produced.
It's conceivable that greens develop a bit of tightness this summer since the supplies are far from overwhelming, but there's no sign yet.
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Canary
Canary is one of the few crops that hasn't fallen victim to the flood of crops trying to get into the queue. Credit that to farmers who consider canary an asset to be cashed in when, and only when, the market makes it worthwhile.
It's debatable whether the market is asking for canary now. Prices are 22 to 23 cents freight on board, but that's steady to where canary has been through most of the fall. That's a sharp contrast to most crops that have fallen, in cases, to the cheapest in the world.
It's hard to make a case that there's a shortage of canary. The Canadian crop was 118,000 metric tons, well above 2012's 98,000 metric tons. Demand doesn't change much year to year, so if Canada kept the world going last year, we should be able to do the same this year.
Chickpeas trade slowly
Chickpeas, once the shining new star in Saskatchewan, are now just another oversupplied Canadian crop. Trade is ongoing, but there is a line-up of sellers.
The global chickpea market is depressed. India, the world's largest producer and importer, had two great crops in a row, so processors are having trouble exporting. The domestic market is stable.
Most Canadian chickpeas are Kabulis. Farmer delivered prices are 30 cents per pound for 9 millimeters, 20 cents for 8 millimeters and 15 cents for 7 millimeters. Few 10 millimeters are grown.
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Some Canadian processors are no bid on chickpeas.
Canola
Canola prices remain under pressure from the large 2013 crop. The 2013 to '14 carryout will reach a record, and we anticipate a year-over-year increase in canola acres for 2014. Canola supplies will remain burdensome in the next couple years. U.S. soybean acres are also expected to increase next year at the expense of corn. At this time, there are no problems in South America, and we expect record soybean crops in Argentina and Brazil. China has recently rejected cargoes from the U.S.
Dried distillers grains with solubles will weigh on soybean meal values. Stronger soybean meal prices have been a main factor driving the bean market.
Malt barley
Statistics Canada estimated the Canadian barley crop at 10.2 million metric tons, of which about 4 million is high-quality malt barley. Domestic malting companies have most of their 2013 to '14 requirements covered so domestic demand is basically full. We hear of exporters still looking for farmer commitments for sales through the next four months. It is important that producers sell into this demand because, once the export business is covered, there will be no more homes for 2013 malt barley.
We are concerned that if farmers don't finish their sales at this time, they will be holding malt barley into the 2014 to '15 crop year, and malting companies do not want to use malt barley that has endured a birthday.
Durum
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Statistics Canada estimated the durum crop at 6.5 million metric tons, which was a surprise to world durum traders. World durum demand is inelastic, which means a small increase in supplies can have huge influence on price. In the case for 2013 to '14 a huge increase in supplies is detrimental to prices. At this time, the world durum market has been lagging the recent slide in milling wheat values. It is important to note this will be the largest Canadian durum carryout in a nonmonopoly environment, and the fundamental structure suggests we could see the durum market drop another $1 per bushel in Western Canada.
The function of the durum market is to encourage demand through lower prices. While North Africa is experiencing dryer conditions, we are forecasting a historically large Canadian export program, but the carryout will still be above the 10-year average. Next spring, the durum market needs to discourage acres. Expect to see durum prices in the elevator system trade below hard red spring values.
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 admin@canadagrain.com or visit canadagrain.com.
