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Market Insight: Lentil supply/demand bullish

Lentil prices remain at very high levels. Export demand is beyond what the Canadian market can supply in 2007-08, and the seeded area has fallen well short of what prices would ordinarily have bought from Canada in 2008-09 due to projected high returns to farmers for virtually all crops. Markets continue to try and ration both spot and forward demand through higher prices, a process that is not yet complete.

Lentil demand is being led primarily by Asian buying, although demand has been strong
from other markets as well. Smaller crops were seen in other lentil exporting countries,

including Turkey and Syria, leaving Canada as the main global supplier at a time when
demand spiked higher.

We expect new-crop lentil acres to be higher than Statistics Canada’s March estimate,
which had acres essentially flat from last year. The fact that new-crop large green and red
lentil prices moved to 40 cents during the window of last-minute seeding decisions should
result in larger acres being reported in Statistics Canada’s June estimate.

The additional
acres will not diminish our outlook on prices, as demand should absorb any increase in
production in Canada. Risks to the generally bullish outlook include the possibility of
demand rationing at these high valuations, and the potential for the Indian government to
set policies designed to significantly increase their domestic pulse production.

— The FarmLink Market Insight was researched and produced by FarmLink Marketing Solutions, a marketing advisory service for Prairie farmers, and is published here with permission of the authors.

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