Improvements in lentil prices over the past month, together with the late start to spring planting, are expected to see more area go into the pulse crop than Statistics Canada indicated in its recent acreage intentions report.
Based on a survey conducted in late March, StatsCan forecast lentil area in 2013 at 2.063 million acres, which would be an 18.3 per cent drop from the 2.515 million seeded the previous year.
However, the lentil market has evolved over the past two months, as prices have improved compared to competing crops, said Bobby Leavins of RayGlen Commodities in Saskatoon, noting most industry participants were of the opinion that actual lentil area will be in line with 2012.
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The late spring in many parts of Western Canada also favours more lentil acres, he said, as it is a relatively cheap crop to grow and has a shorter growing season than many other crops.
Red lentils currently show more strength than green varieties, and the emphasis in the lentil acreage is expected to shift towards reds, he said.
Spot bids for No. 2 large green lentils can currently be found in the 20 to 23 cents per pound range, which is in line with new-crop options, according to Prairie Ag Hotwire data.
Red lentils are topping out at 27 cents per pound for nearby delivery, with new-crop bid at up to 25 cents per pound. At this time a year ago, green lentils were trading at a small premium to reds.
Some of the strength in the red lentil market has been tied to issues with India’s crop, although Leavins said demand from the subcontinent can be hard to pin down.
On the old crop, Canada will carry more green lentils into the new crop year, with red lentils seeing the majority of the movement in the market currently. Red lentils have been moving steadily ever since hitting 20 cents per pound in January, Leavins said.
Lentils will eventually enter the transition phase of the year, where end-users start holding out for new crop instead of chasing the old crop higher, but that point has not yet been reached, said Leavins.
Values appear to have reached a plateau for the time being, he said, with Canadian production likely to account for much of the direction going forward. Activity in outside markets, such as canola and wheat, will also play a part in lentils.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
