Grain Snippet: Lentil Prices Plunge on Poor Demand
Lentil prices have remained under significant pressure over the last month, primarily due to lack of demand. Both old and new season prices in SA are down $60/MT since the beginning of June, with a drop of $40/MT in Vic over the same period. The price premium for larger lentil varieties (nugget and jumbo type) has eroded to about $30-40/MT, previously around $80-90/MT.
ABS data retrospectively revised April lentil export data, dropping 12kMT of shipments reported for India, likely on the back of postponed shipments or outright cancellations. Aussie lentil export data over the April/May period shows a distinct decline in interest from India, particularly following the change in import policy. India reimposed lentil import duties in early March, prior to the original anticipated date (31st March). For the Oct-May period, Aussie lentil exports to India are down 36.4% compared to the same period last season. Whilst the decline reflects the lower Aussie production for 24/25 vs 23/24, it also highlights the lower Indian demand on lentils compared to recent years. As a notable contrast, Bangladesh’s imports of Aussie lentils were 35% higher y/y over the same period of analysis.
India’s decline in lentil appetite is a consequence of a global glut of lentils, relatively speaking. Here’s where some context is important in this market. When India initially had consecutive poor pulse yields in 21/22, 22/23 and 23/24, it coincided with some poor lentil production years in Canada, the globe’s largest pulse exporter. The Indian government endeavoured to shore-up its pulse stocks by initially dropping import duties (for multiple pulses), whilst simultaneously combatting the high food price inflation that plagued many countries post-pandemic. Australia was able to benefit from this large demand and increased market share, with national production ramping up to an average of 1.4MMT as growers responded to the improved price signals.
Fast forward to the 24/25 season where, despite a rough year for rainfall, Australia was still able to produce over 1MMT of lentils and Canada’s supplies saw a significant rebound. Lentil production in Russia and Kazakhstan has also been steadily rising over recent years. India’s domestic production improved in 2024/25, and food price inflation is seemingly back under 1%. Alternative pulses such as yellow peas have also been purchased by India as cheaper substitutes, with significant supplies available from each Russia and Canada. Notably, India extended import duty exemptions for yellow peas as the easiest and cheapest pulse product. The 24/25 season has been met with record lentil production amid the major players on the global stage, and it looks like a similar story is unfolding for 25/26. With India taking a back-seat on lentil imports, supply is outweighing demand at the fundamental level, and prices are reacting in kind.
With all of that said, the Aussie and Canadian crops for 25/26 are not yet guaranteed, particularly given the very rough start to the season in each country. Recent rainfall has kept a lot of these crops out of dire trouble, but we still have a few months to go before yields are realised, for better or for worse. Presently, the lentil market is comfortable whilst demand is subdued, yet will remain prone to supply shocks if Australia and Canada continue to face production headwinds this year.
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