Grain Snippet: Heavy Supply Still Hangs Over Lentils
Rainfall through SA and Vic has been above average over the last couple months and thus been strongly supportive of increased yield potential for 26/27 lentils. Australian lentil crop production forecasts are getting larger; ABARES had estimated the national lentil crop at around 2.2MMT, but this is likely to be revised higher to near 2.5MMT in the September update. Due to the potential impacts of El Nino through the spring, we could yet see rainfall fade and frost risk increase, but as we get closer to harvest the risk of widespread yield loss is diminishing.
Despite the strong production prospects for lentils this year, Aussie grower selling has been incredibly limited due to lacklustre market prices. Primarily due to the burdensome global supplies carrying in from 25/26, new crop lentil bids have struggled to shift much higher than $600/mt on a delivered Adelaide/Melbourne basis over the last six weeks.
The latest data from the ABS on Australian lentil exports have demonstrated a poor month for June, coupled with a retrospective adjustment for May (a volume decline of 41%!). India has remained the primary destination for Aussie lentils, making up 42% of total lentil exports for the shipping season to-date. Whilst it is common for the tail-end of the shipping season to slow in pace, for local prices to react more favourably old crop supplies need to be drawn down. There is little lentil volume left in SA, with a lot more left in Vic ahead of the new-season (expected record) harvest.
In Saskatchewan (the primary lentil producer for Canada), lentil conditions have reportedly deteriorated over the last few weeks, falling from 86% good-to-excellent down to 61%. Crop development has been rapid due to warmer temperatures and dry conditions in key lentil-producing regions. Canada’s lentil harvest would normally commence from late August and continue through September; a wet and slow start would have pushed harvest later had the heat not arrived. The combined late start and rapid finish have likely lowered yield potential, particularly with the heat during the critical pod-setting and seed-filling stages. With all of that said, due to the high-moisture start to the season, Canada’s total lentil production is not anticipated to fall substantially from prior forecasts which sit between 2.3-2.35MMT. Stats Canada are yet to publicly catch up to the data, and have the crop pegged at 2.65MMT as of their mid-July report. These estimates remain considerably lower than last year’s record crop of 3.36MMT. Similar to Australia, there is a larger-than-normal carry out for lentils in Canada, though green lentils are more burdensome than reds when looking at the breakdown.
There is ongoing uncertainty over the outcome of this year’s Southwest monsoon in India. The July-September period is critical for the timing of Kharif crop planting and national soil moisture. This year’s monsoon onset was stalled, with forecast rainfall anticipated to be below average due to the strengthening impacts of El Nino. India’s pigeon pea planting window is nearing its end, but the monsoon delays has left planting progress to-date around 10% behind normal for this time of year. Historically, a poor pigeon pea crop and/or poor moisture reserves ahead of India’s rabi crop, have led to increased pulse imports to cover the resulting domestic production shortfall; this includes Australian lentils.
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