Canada Markets

Prairie lentil growers will be watching price signals closely as we move forward, with old-crop supplies extremely tight while the new-crop harvest is affected by challenging weather conditions on the Prairies. As of Saskatchewan Agriculture's most recent Crop Report dated Sept. 1, 23% of the crop had been taken off, although progress has been made since.

Friday's Statistics Canada July 31 stocks report suggested that the ending stocks for lentils totals 169,000 metric tonnes, down 45% from last year and the lowest in four years, as indicated on the attached chart. This is comprised of 69,000 mt reported in commercial facilities and 100,000 mt estimated to be on farm.

While this carryout is much higher than the three-year average between 2007/08 and 2009/10 of 36,000 mt, it is much lower than the most recent three-year average between 2010/11 and 2012/13 of 665,667 mt.

One thing to note is a recent adjustment made to 2013/14 production. On Aug. 21, when the July production estimates were released, they were compared to a 2013/14 production figure of 1.8805 million metric tonnes. Just weeks later, 2013/14 production has been revised higher by an amount of 292,300 mt for a total of 2.1728 mmt. As a result, carryout is suggested to be higher than estimated earlier by Agriculture and Agri-Food Canada that announced ending stocks to be 125,000 mt in July. Also of interest, AAFC was expecting a 1.6 mmt export program as of their July 22 supply and demand report, while Statistics Canada has pegged the year's exports at 1.750 mmt, resulting in the need for prior-year revisions.

Further uncertainty remains when the harvested acre versus seeded acre calculation is arrived at due to the impact of excessive moisture on the Prairies. In addition, less than desirable weather throughout harvest will negatively affect grades and leave top quality product in tight supply.

Prices have responded to the upside. No. 1 large green lentils are reported by Statpub at 25 1/4 cents/lb delivered Saskatchewan plants, up from a low of 19.29 cents/lb in March. Number 1 red lentils are bid at 25.68 cents/lb, after trading at 18.57 cents last October. Uncertainty will continue to play a role in supporting this market.

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

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