Lentil Prices and Production

[nw9flynn]

With lentil prices dipping lower every day what is the answer?

Is the price related to Western Canadian production or is this traced back to a increase in producion from the Northern United States. U.S. production is up this year but what nobody talks about is the type of lentil they grow. It is my understanding that they grow mostly MGL and LGL.
With the low price on GL this year is this finally the wakeup call for producers to grow Red's? I think so. Yield better, do not downgrade as easy, and this year the price is better. Producers had the option of a $0.16/lb for #2 or better fob farm in my area this spring.
Good luck with harvest everybody.

Charlie and Lee, your thoughts....

[charliep]

Lots of North American lentils. Only Saskatchewan surveyed in the last Statcan report - 1.2 mln tonnes versus 950,000 tonnes in 2004. Obviously, survey done 1 1/2 months ago so has changed.

Went to USDA site but couldn't find US production so I am using Stat Publishing numbers (July forecast) - 350,000 tonnes, up 80 percent 2004 and triple previous levels. Farm bill changes have had an impact. My understanding is mostly mid sized greens (richlea) but will seek others help/comments.

Other lentil areas seem more normal in production with obviously production uncertainty in Australia (later harvest than us) and India (their production season mainly during our winter). These areas tend to be more red lentils with green more grown (at least for export) in North America.

There is larger world trade in red lentils than greens. It is also the largest produced type/biggest market. There are less markets for green lentils but they tend to be more the premium markets. North America (actually read Canada) supplies most of these markets.

My only comments on reds is how short the plant is relative to other lentil types. Otherwise a good market. There are some grade advantages given they are dehulled/ground for humus type products versus green which are eaten whole.

On the topic of standability in crops, I was up in the Peace River region and saw a nice field of peas that were standing about 2 to 2 1/2 feet off the ground. The farmer was straight cutting. Didn't ask the variety. It is amazing was some of the new varieties are doing for harvestability.

[melvill]

Another interesting twist in the special crop market for exporters as a result of Katrina.

Extreme volatility in energy markets is creating problems for shippers. There are limited ways for shippers to lock in future shipping costs. Yes, they can contract with railways and ship lines but those two shippers' contracts allow them to add fuel surcharges to the contract price.

The end result is that some exporting companies have already ordered traders to limit their long positions(inventory purchases without corresponding sales) and short positions (sales made without matching farmer purchases).

The end result is that purchases from growers and sales to end-user will be kept in much closer alignment than is usual. The end result of that alignment is that there could be fewer price premiums from companies that need to bid up the market to meet sales commitments.

[grainboy]

I don't claim to know very much but because we have had decent prices for red lentils this year a lot of producers are thinking they are the save all in the lentil market but with the amount of other countries growing reds I don't think we will ever see a big premium.

Last year off the combine Large Green Lentils were 23c, 5yr average probably 18c. Red lentils same time frame 18c, 5 yr average probably 13.5c.

So just for argument sake if I have a 20BU Laird crop at 18c=216/acre and my Blaze crop doing 25% more x 14c=210 no real premium for the reds

In the last 5 years Reds have hit a high of 20c Large Greens we have seen 30c, I think it is just a cyclical thing and right now the world is over supplied with green lentils. Don't get me wrong reds are a great lentil to grow but I think over time I still see more money in a green lentil.

[nw9flynn]

Grainboy,

Good point about Red's not ever seeing a price premium as compared to greens. However with your number's you used #1 LGL VS #2 or better RL. With a good rain LGL can go from a #1 to a X3 fast. There can be a large price spread between grades (if you can find a buyer for a X3 lentil this year). It takes alot of rain to get a RL below a #2. Is a RL less risk to grow? Harder to combine but easier to make grade and a more stable price.
How have your lentil yields been on your LGL? My Grandora's avg. 25bu and my Plato's 30bu. I graded 40% #1 and 60% #2. I've heard yields as high as 35bu and as low as 15bu.

[grainboy]

NW9, I am more on the buying side than the growing side these days, you are right about the quality issues although after weekend rains I am starting to wonder if the reds will even make a #2 anymore. Talked to a grower in the south east today no rain still combining, reds did 20BU med greens 30BU both #1s durum avg 40 #1 & #2 14% pro.