CNS Canada — Lentil prices in Western Canada have dropped significantly over the past year as India’s policy changes and militant actions elsewhere affected markets, according to traders.
Green lentil prices in Western Canada lost anywhere from 20 to 36 cents per pound over the course of 2017, according to Prairie Ag Hotwire. Prices are now sitting anywhere from 12 cents per pound for Eston No. 3 lentils to 36 cents per pound for Laird No. 1 lentils.
Leading up to this year lentil prices in Western Canada hit record highs and acres planted soared from 3.4 million acres in 2010 to 5.9 million acres in 2016, according to Statistics Canada. As well 2016 saw a record number of lentils produced at 3,248,200 tonnes.
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David Newman with Commodious Trading said the drop in price always circles back to India and the question “Is India buying?”
“When (India was) able to get pigeon peas for $300 a tonne, $1,600 lentils from Canada seemed absolutely absurd. So no one’s going to buy them. So that leaves everything that we own on the rest of the world,” he said.
The lack of India buying led to carryover stock which pressured prices.
“There’s still demand going on but people overseas are hesitant to take losses too,” Newman said. “The majority of people that I talk to were looking at not a lot of carryover, drought conditions, high prices in the market, high priced inventory in the market.”
India caused stress in Canada this year for pulse crops. In the summer India had Canada on its toes as it extended a pulse fumigation exemption only to the end of September. After September the exemption wasn’t renewed and in November the Indian government placed a 50 per cent tariff on pea imports to the country.
As well India has been vocal in saying it plans to become self-sufficient for pulses.
Another trader based out of Saskatchewan said the drop in prices relates back to unrest at the Spanish port of Melilla near Morocco, which ISIS supporters took control of last year, stopping shipments from being received there.
“All that product had to get resold into Europe which drove the prices down and it was the start of unrest in the whole (of) North Africa,” the trader said, adding the market wasn’t able to recover from the set back.
As well, countries such as Russia, Ukraine and Kazakhstan have expanded their pulse acres and are undercutting Canadian prices.
“They were able to come in right at the start of the year and no one really took them super seriously but they delivered. Whether it was luck or whatever, they delivered a half decent product to some important markets,” Newman said.
Both traders agree the low price trend will continue for the foreseeable future. Buyers aren’t rushing to buy lentils.
“This is a slowdown that started last March, April and it caused a carryover some of the 2016 crop. And as good as everybody tries to hide the fact, the farmer still had stuff in their bins, the plant guys still had stuff in their plants and now we’ve got this crop on top of it,” the trader said.
If you compare the current prices to those of a few years ago, Newman said, farmers are just back at square one following hyper-inflated prices.
— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @AshleyMR1993 on Twitter.
