Canada Markets

India's Ministry of Agriculture released the Third Advance Estimates of crop production for 2020-21, with the estimate for total foodgrains production increased by 2.2 million metric tons to a record 305.44 mmt. This includes what would be record wheat production of 108.75 mmt and record rice production of 121.46 mmt.

Despite recent media reports indicating that India's government forecasts were overstating the potential for the pulse crop, the government increased its forecast in this month's estimates. Total pulse production is shown at 25.58 mmt, which would be a record volume, up 1.160 mmt from their Second Advance Estimates released in February, while up 11.1% or 2.550 mmt from the estimated 2019-20 production. This volume is just 20,000 mt below the government's target for the crop year.

Various media reports are indicating the Indian government has overstated the potential for its crop prior to today's revised estimates. Recent reports indicate that India has booked 500,000 metric tons of lentils for delivery during the next few months, while a potential easing of import tariffs may be in sight.

As discussed in past months, India's estimate of actual pulse production fell below the initial target in three of the past five years (2015-16 to 2019-20), while by as much as 3.58 mmt in 2015-16. During the past five years, the actual production estimate averages close to 1 mmt below the government's initial target.

What are the markets telling us? Weekly Saskatchewan Agriculture data as of May 19 shows the large green lentil bid delivered to Saskatchewan plants up from the previous week to average $36.92/cwt, the highest bid seen since Nov. 2017. This is up 19.6% from one year ago and is up 44.6% from the three-year average for this week. Daily statpub.com bids remain unchanged from last week's weekly price on May 26. Also of interest, new-crop bids are shown from $33/cwt to $40/cwt for Nov/Dec/Jan delivery; prices are expected to show further upside.

Small red lentils were shown to rise to average $33/cwt as of May 19, also remaining unchanged on May 26. This is the highest bid seen since July 2016, up 23.7% from last year and 20.6% higher than the three-year average. New-crop bids are shown to range from $28 to $35/cwt, showing the potential for upside movement.

Dry pea bids settled lower in recent data. Green peas were reported to average $9.37/bushel (bu) delivered to Saskatchewan plants, down from a high of $9.83/bu reached in Nov/Dec and the lowest bid shown in five weeks. This is down 15.8% from last year and down 10% from the three-year average. New-crop green peas are shown to range from $7.50 to $10/bu.

Yellow peas are reported to average $9.38/bu, down from a $10.25/bu high reached in February/March. This is up 20.3% from one year ago and is up 32.3% from the three-year average for this week.

This month's Agriculture and Agri-Food Canada forecasts show that decreased production for Canadian lentil and pea crops and lower supplies in 2021-22 will lead to decreased exports for the 2021-22 crop year, while ending stocks for both crops for 2020-21 and 2021-22 were lowered by 50,000 mt. Ending stocks of peas are to fall to 200,000 mt or 5% of use in 2021-22, which would be the lowest volume reached in six years. Stocks of lentils are to remain unchanged at a negligible 100,000 mt at the end of 2021-22, which would be the lowest volume reached since 73,000 mt was carried out of 2015-16 as seen in Statistics Canada estimates.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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