New-crop demand for Canadian lentils has been extremely light as foreign investors are waiting for the weather situation across the Prairies to stabilize before getting more involved, an industry official said.
"The only business that’s going on right now is with people who have to buy. Otherwise they’re sitting on the sidelines because there’s really not much incentive for them to come to the table to buy old-crop or new-crop lentils," said Cam Laxdal, managing director with Lakeside Global Grains in Winnipeg.
Foreign investors are also sitting on the sidelines right now because they’re waiting to see what the final seeded acreage numbers for lentils will be this season. Laxdal said he thinks April’s Statistics Canada seeding intentions estimates were too high.
"I think most of the industry was thinking around two million acres or less," he said.
Statistics Canada estimated that 2.46 million acres of lentils would be planted this season in its April report. The federal agency’s final acreage report is set to be released on June 27.
Laxdal expects lentil acreage numbers to decrease compared to the numbers estimated in April.
"I think more acres were moved out of lentils into other crops as the planting season went on because lentil prices have been sliding slightly," he said.
Prices have been lower as good conditions for seeding and growth early in the season weighed on values. The StatsCan April report that showed more intended seeded acres than expected was also bearish for prices, Laxdal said.
Laxdal said producers aren’t thrilled about the lower prices, and are waiting for some upward movement in values before selling off their lentil supplies.
"I think they certainly have 20 cents a pound in mind for reds, and they probably have 22 to 25 cents per pound in mind for large greens," he said.
The market probably won’t see much more downward price action, he said, as good crop conditions and expectations of large yields are already priced into the market. Values have a better chance of moving upward, he said.
"There could be some upside if we do run into a weather problem, such as an extended period of wetness or high humidity because that could cause a lot of disease pressure," he said.
–Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
New-crop lentil bids sluggish on Prairies, March 5, 2012