Canada Markets

Canada's relations with India took a further turn in the wrong direction on Oct. 3 when media reported that India has asked Canada to reduce the number of diplomats stationed in India by two-thirds or by 41 by early next week. This follows the Sept. 18 statement from Prime Minister Justin Trudeau in the House of Commons that "credible" intelligence has linked the Indian government with the shooting death of Sikh leader Hardeep Singh Nijjar in British Columbia.

While there is little fresh news on Wednesday, Tuesday's reports indicate that Prime Minister Trudeau has responded by saying that the government is "not looking to escalate" tensions with India, yet not committing to India's request to reduce Canada's diplomats in India.

On Oct. 3, Reuters published the story, "India's Spies Infiltrated West Long Before Canada's Murder Claims" (https://www.reuters.com/… It is conceivable that Canada's lax treatment of foreign interference, including from other nations such as China, has gone on for so long that Canada is currently left with few options in the current case, especially without a united response from western nations. There is some speculation that a diplomatic solution will be reached that may not involve India facing the crime that it has been accused of.

In the case of lentil trade, uncertainty exists between exporters and importers alike as the scramble to execute existing contracts takes place while showing caution when it comes to new business. The Economictimes.com reports that The Delhi Chamber of Trade and Industry has written a letter to India's government to push the idea of an outright ban on Canadian lentil imports.

As seen on the attached chart, the red lentil bid delivered to Saskatchewan plants has backed away from recent highs and continues to show weakness this week. As of Sept. 20, the Saskatchewan government's weekly price report shows red lentils at 38.8 cents/lb., the highest seen since June 2022 and up from the recent July low of 32 cents. One Saskatchewan broker reported red lentil prices as high as 40 cents FOB farm in late September.

The same weekly report shows this price dipping to 37.96 cents as of Sept. 27, while Statpub.com shows this bid at 36.96 cents on Oct. 4 signaling a further move lower this week.

Statistics Canada will release official export data this week for the month of August, while the Canadian Grain Commission has released its August exports through licensed facilities in August, showing 24,600 metric tons of bulk lentils exported in August, of which 22,000 mt was shipped to India.

While Canada may be backed into a corner on this issue, the same may be said for India. The country is needing imports in order to help in its fight against food inflation, while Australia's hot and dry conditions may curb production potential and limit India's options to source product.

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

Follow him on X, formerly known as Twitter, @Cliff Jamieson

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