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Watch The Weather Overseas

In recent months, we’ve heard of flooding in Australia and Pakistan causing losses and damage to field crops. Last year’s flooding and precipitation levels of 150 to 200 per cent above normal in Western Canada is being made worse by above average snowfall in many regions of Western Canada. As balance, it’s too dry in Argentina, and many of the world’s primary production regions are experiencing questionable growing conditions. What does all this mean for lentil and chickpea markets in Western Canada?

REDUCED ACRES

There is little question that lentil and chickpea acres in Canada will be reduced, but by how much varies. My opinion is we’ll see a 15 to 20 per cent reduction, stemming from some “fringe” areas of lentil production returning to more traditional crops due to higher price outlooks for cereals and oilseeds, a general relaxing of rotation by all farmers (again, because of positive outlooks for most commodities) and excess moisture in south central Saskatchewan.

The reduction, or at the very least stability, in kabuli acres is likely purely a risk versus reward issue. In a year where it is unlikely growers will be seeding early due to the moisture levels, many growers will ask, “Why take the risk growing chickpeas when I will be profitable growing cereals, canola, lentils or field peas?”

Farmers everywhere in the world think in a very similar fashion. They want the highest possible return per acres combined with lowest risk. Will that equate to lower seeded acreage in other areas of the world, too? So far it seems India’s rabi pulse seeding is up about eight per cent over last year, the bulk of this is likely to be desitype chickpeas. Lentil acres could increase slightly. We’ll have to wait and see what other growing regions do as the spring progresses.

MARKET IMPACTS

With potential lower acres in Canada, and adverse weather events here and elsewhere, what should a farmer do with stocks they have? Looking forward, what should you expect for new crop production and prices?

For red lentils: Current stocks should be addressed as high quality, or No. 2 or better and low quality X3 or worse. If you are holding No. 2 reds my suggestion is to just keep holding. There may be positive movement in the price as the year progresses and stocks dwindle from Australia. There is small chance of the price moving lower, however. If you hold X3, No. 3 or worse my suggestion is to move them now while there seems to be interest in the high teens for No. 3s. Production of poor quality here and elsewhere means there is plenty of low grade; I always think it’s a good idea to sell low grade when the market has interest, assuming the price appears adequate, and right now it does.

New crop red lentils are of course a bit of a mystery right now until we see what happens elsewhere with production. Why sell new crop today for much less than current offerings for spot contracts? It would take 24 to 25 cents a pound to get my interest in these.

For green lentils: Again we should start with a look at quality. If you hold stocks of old crop lairds grading a No. 2 or better, bids (as of early February) are in the mid to high 30 cents range. It is unlikely that there is much more positive movement in that price, making it not a bad idea to sell now. Small price spikes are still possible, so if you are a keen market watcher and able to react quickly you may be able to take advantage of one of these spikes. For low grade greens, my thoughts are in line with what I said about reds — while the market has interest it is a good idea to move them when the price is adequate. Right now with X3s well into the 20s and No. 3s around 20 cents per pound there is little reason not to sell.

The coming season looks pretty good no matter what you’re seeding. The high moisture levels and snow from last year may provide some challenges this spring, but this year I think most farmers are prepared for those challenges and will be in a good position to react to Mother Nature’s ever changing mood swings. I know we are all looking forward to a better growing season and a positive marketing campaign for 2011. With a little luck and a lot of hard work we will make a success of whatever comes our way this year.

JeffJacksonisexportmarketingmanager withWigmoreFarms( www.wigmorefarms.com) basedatRegina,Sask.Haveyougota marketingstrategyquestion?Sendthemto [email protected] orcall306-757-3005

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