Grain Snippet: Canadian Harvest Heavy on Lentil Prices
The lentil market has been hit hard by the onset of the Canadian harvest. In both SA and Vic, nipper lentil prices for the 25/26 season have declined $80-100/MT (across various delivery locations) since the start of August.
Initially, the Canadian harvest started off at a slow pace due to some late rains that hit a large portion of the south-western lentil area in the Prairies. Harvest is now in full swing across Canada, with a heavy focus on both cereal and pulse crops. In Saskatchewan, the province that makes up roughly 85-87% of Canada’s lentil production, an estimated 35% of the lentil crop had been harvested as of 25th Aug. Meanwhile, Alberta’s lentil harvest was sitting at roughly 62%. Due to the late rains, some areas across the Prairies have remained very wet; this has helped to support yields in some areas that were previously needing the extra moisture, but has the potential to hamper quality so close to the harvest period. Canada’s lentil production forecast has been pegged at near 2.5-2.6MMT, up 5% from the prior year’s 2.43MMT and nearly 42% higher than the drought-hit 23/24 season.
For Australia, ABARES has updated its national production estimate from 1.5MMT to 1.7MMT following the late July and August rainfall. The precipitation was sufficient to get many (albeit not all) growers out of dire straits for the 25/26 season. Certainly, more rainfall will be needed though September to support the yield outlook set by this updated ABARES production forecast. As a key climate driver, the Indian Ocean Dipole (IOD) is presently forecast to sustain a negative index through September and much of October; historically this set-up would offer improved rainfall through the key growing period for southeastern Australia.
On demand, India has remained relatively quiet on imports over the last few reported months. There are cheap pulse alternatives on the market such as yellow peas which are in abundant supply from Canada and Russia this season. India has retained a zero-duty on yellow-pea imports, but has an 11% import duty on lentils at the time of writing. After several years of liberalised pulse imports, India has wound down its lentil appetite as local buffer stocks have been predominantly replenished, old crop stocks have hit the domestic pipeline and the country’s food price inflation has significantly declined.
The global balance sheet for lentils is tipped to see total supplies outweigh demand for the season, most notably driven by the positive production outlooks from Australia and Canada (each major exporters). With that said, the Aussie crop is still yet to be realised, and the late rains in Canada are likely to result in some modest downgrades in quality. Furthermore, the Indian Rabi crop (the country’s primary pulse crop for lentils and chickpeas) is yet to be planted, and harvest is not expected to commence until late February next year. With relatively tight stocks-to-use leading into the 25/26 season, any supply shocks would naturally be supportive for pricing in the longer term.
This is a sample only, if you would like to view the entire document and our recommendations, please contact CloudBreak to discuss becoming a member on (08) 8388 8084.