Prairie farmers holding onto incredibly large lentil stocks, in hopes of seeing higher prices down the road, may need to keep holding onto those supplies for the foreseeable future or sell at lower levels, as end-users are reluctant to pay up in the current market.
Canadian lentil stocks as of July 31 stood at 750,000 tonnes, a 17-fold increase from the 44,000-tonne carryover the previous year, according to a recent report from Statistics Canada.
With the current lentil harvest nearing completion, international buyers are looking at Canada’s large lentil supply situation and are expecting to see lower prices.
However, farmers have their own ideas about what the lentils are worth, “and right now those two numbers are probably $30-$50 per tonne apart,” said Cam Laxdal of Lakeside Global Grains in Winnipeg.
Some green lentils are still moving to traditional destinations, but the difference in price ideas was limiting the activity in the red lentil market, said Laxdal.
In addition, red lentils are currently being offered from Australia at prices below Canadian levels.
About 65-70 per cent of the lentils on farm are red lentils, said Laxdal. There were currently opportunities to move red lentils at about 20 cents per pound, he said, “but if they’re looking for 25, they could be waiting a while.”
The quality of the 2011-12 Canadian lentil crop is looking good, said Laxdal. As a result, he expected to see a narrowing of the gap between higher- and lower-quality supplies.