Lentil demand “tsunami” approaches

Farm Credit Corp. forecasts an average cash price for lentils at $660 per tonne\

It will be difficult for a reduced Canadian lentil crop to meet increased demand from India and Turkey. Canadian yields are going to be significantly smaller than initially anticipated due to dry conditions. Farhan Adam, chief executive officer of Marina Commodities Inc, is forecasting 1.3 to 1.5 million tonnes of red lentil production. | file photo

India and Turkey will be ravenous buyers of lentils this year but Canada may have a tough time satisfying their needs, says an industry executive.

“I feel a tsunami of demand is going to come through,” said Farhan Adam, chief executive officer of Marina Commodities Inc., a leading exporter of Canadian pulses.

He believes India needs about 600,000 tonnes of red lentils between now and the end of March 2022. Turkey will require another 400,000 to 500,000 tonnes over that period.

“(Turkey) faced extreme drought this year, which has caused every crop to be smaller than expected,” said Adam.

The United States Department of Agriculture’s Foreign Agricultural Service recently dropped its Turkey wheat production estimate by 1.1 million tonnes, noting that the average rainfall between Oct. 1, 2020 and June 30, 2021 was 24 percent below the long-term average.

Wildfires are burning out of control in the country.

Adam forecasts 150,000 to 200,000 tonnes of Turkish lentil production, which would be half of a normal crop.

“We’re anticipating a huge demand coming out of Turkey,” he said.

The same goes for India, which recently slashed its import duties in an effort to keep food price inflation in check. Adam believes India’s crop is even worse than Turkey’s.

He expects demand from the world’s top two red lentil buyers will increase over the next two or three weeks.

Adam is already receiving daily inquiries from Turkish buyers who are trying to digest the recent run-up in prices caused by India reducing its import tariffs.

But will there be enough supply to meet what is expected to be voracious demand?

Canadian yields are going to be significantly smaller than initially anticipated, he said. Adam is forecasting 1.3 to 1.5 million tonnes of red lentil production, down from earlier estimates of 1.8 to 2.2 million tonnes.

Farm Credit Corp. said the potential production impact could be similar to the drought of 2002 when Saskatchewan lentil yields fell by 53.4 percent compared to the previous year.

The lentil crop fared worse than spring wheat and canola that year.

FCC is forecasting an average Saskatchewan lentil cash price of $660 per tonne in 2021-22, which would be 20 percent above the five-year average.

Adam said carryout from last year’s crop will be a paltry 100,000 tonnes.

That is why he believes growers will be in no hurry to sell this year’s crop despite the looming tsunami of demand.

“There will be very minimal participation in the next few months,” he said.

The outlook for the green lentil market is even more bullish than reds, said Adam.

Canada will be the only major supplier as the U.S. crop is in big trouble. Montana is by far the largest lentil producing state and three-quarters of its crop was rated poor or very poor as of Aug. 1.

He believes Canadian growers are going to wait for red lentil prices to improve from today’s values of about 38 to 40 cents per pound.

Importers may turn to substitutes but there is a global shortage of most pulses and they’re not going to find anything much cheaper than red lentils.

Australian red lentils are currently selling for less than Canadian product but that dynamic will change when harvest gets into full swing.

Turkey imports product from the Black Sea region but Kazakhstan had a crop failure this year as well and Russia’s supplies are minimal, said Adam.

Importers may be in for an unpleasant surprise even if they boost prices to levels that growers find enticing. Canadian exporters will have trouble shipping product overseas due to soaring freight rates and serious logistical impediments.

“If this demand comes in, God knows where we’re going to find containers from,” he said.

The Western Producer

Tags: Turkey, Canada, India, crop, lentil, lentil demand