Pulse weekly outlook: Canada’s lentils face competition

MarketsFarm — Acreage and production of lentils in Canada are expected to mostly remain the same for the 2021-22 crop year.

While strong demand during the COVID-19 pandemic has bolstered prices over the past year, increased production from competing exporters may cut into that buying interest going forward.

Elyce Simpson Fraser, senior vice-president of Simpson Seeds at Moose Jaw, Sask., said prices are coming down from pandemic heights hit last spring when demand for dried goods increased and overseas production decreased.

Other nations have also since upped their own lentil production, reducing demand for Canadian imports.

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“We experienced a huge downturn in the market with countries such as Russia and Kazakhstan who stepped in and started to produce quite a number of lentils, and therefore the Middle East region drew on that supply,” she said.

However, she added, there may still be an opening to come for Canadian lentils.

“What we’ve seen is, due to the other competition for acres in those regions and prices becoming unattractive to those growers, that they’ve reduced those acres and put in into other commodities such as wheat and yellow pea that they can move more fluidly for a better price.

“There could be some re-balancing again of those stocks and it depends if the price is high enough to encourage production internationally.”

In January, Agriculture and Agri-Food Canada predicted seeded area for lentils would rise five per cent in 2021-22, to 4.48 million acres, while production decreases slightly to 2.85 million tonnes, given a return to average yields. Due to lower carry-in stocks and smaller supply, exports would drop to 2.7 million tonnes. Assuming an average grade distribution and discounts, the price is expected to fall.

If Russia and Kazakhstan increase their lentil acres in 2021-22, it could bring downward pressure to Canadian lentil prices, Simpson Fraser said.

“Other substitutable products could potentially come in if the price becomes too high.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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