Grain Snippet: Lentil Prices Pause
Lentil prices have steadied over recent weeks with delivered prices settling just above $600/mt. Recent price support has been driven by a lower Aussie dollar (vs September), limited grower selling and a decline in Canadian liquidity post-harvest. Some near-term shipping shorts have seen recent opportunities for growers with early harvests.
The lentil market initially fell during the onset of the Canadian lentil harvest. Through August/September lentil prices dropped around $100/mt amid strong selling pressure, coupled with increasing production forecasts. The Canadian lentil production for 25/26 is now projected to sit near 3MMT, up from 2.4MMT in 24/25 and roughly 15% higher than prior forecasts. Including carry-in, Canada’s lentil supply for 25/26 is estimated at 3.6MMT which represents a dramatic increase of 32% y/y. According to local reporting, the majority of the Canadian carry-in supply of lentils is red lentils (out of red and green). The combination of the large carry-in of reds and higher-than-anticipated production has been a fundamental heavy weight on lentil prices.
The late-season increase in Canadian lentil yields was brought about via heavy August rainfall that saved huge swathes of key lentil-growing regions of the Prairies. Some rains came too late, and some areas were adversely affected by the falls due to the timing so close to harvest. However, quality for deliveries to-date has come in surprisingly good, only slightly below the 10-year average.
Meanwhile, the Aussie lentil crop is projected to land near 1.7MMT. This figure is predicated on a large increase in area y/y, and assumes below-trend yields given the dry start to the year. Whilst some growers were able to benefit from spring moisture, most of September and early October was disappointing for rainfall across SA and Vic. Had the last couple months offered more consistent and widespread rainfall, the lentil production forecast would have neared 2.0MMT. Late October and November rains will offer some benefits for later-harvested crops through south-east SA and parts of Vic. At the same time, the late-season rain could impede harvest progress and further drive shorts in the market for any early November commitments.
Nevertheless, with a large combined Canadian and Australian lentil supply for 25/26, the market is anticipated to remain supressed compared to the last five years. Global supply is forecast at a record high, and demand is not currently projected to keep up pace. Presently, there are no critical pulse production issues on the cards for the Indian subcontinent. More broadly, even if the upcoming Indian lentil crop were to falter, there are significant supplies of substitutes amid the wider pulse complex.
India’s Rabi (post-monsoon) crop planting has commenced; this includes the country’s lentil crop which is presently sitting slightly behind last year’s pace – though it’s still very early days. Rainfall through October in India has been above average and soil moisture for primary lentil growing regions is above average.
With supressed prices for lentils, we could see a larger portion of growers hang onto their lentils this season once cash flow needs are met.
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