Despite some of the bearish data hanging over the global pulse markets, old-crop and new-crop lentils have shown some upside potential as seen in recent bids reported by Saskatchewan Agriculture and Statpub.com.
This is despite an expected significant year-over-year recovery in pulse production in India, reports that India's wholesale and retail prices have fallen by nearly 50% in 2017 from 2016 levels, and an ongoing search for a final resolution to India's fumigation rule that will affect shipments from Canada after June 30. As well, an expected increase in Canadian ending stocks for 2016/17 and again in 2017/18, along with a significant year-over-year increase in United States acres dedicated to the crop, could also weigh on prices.
As indicated in USDA's Prospective Planting report, American farmers will seed a record 1.055 million acres, a 114% increase over a two-year period. The largest-producing state is reported to be Montana, with 640,000 acres, while North Dakota is expected to seed 300,000 acres. Alberta Pulse Growers' spring report quotes Murad Al-Katib, CEO of AGT Foods saying, "The next big frontier in the pulse world is either Alberta or Montana."
Wednesday's new-crop large green lentil bid is reported at $34 to $41/cwt, while the red lentil bid is indicated at $24-$25/cwt. The mid-point of these ranges were plotted on the attached chart, or $37.5 and $24.5/cwt respectively. While new-crop bids are inferior to the average September/October bids calculated over the past two years, which coincided with consecutive droughts in India, the mid-point of the reported range is $3.10/cwt higher than the five-year average for large greens and equal to the five-year average for reds.
The April 21 Statistics Canada acreage estimates will be closely watched for signs of producer's response to the current market signals, while early AAFC estimates suggest a 5% reduction in acres from the record area seeded in 2016.
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