A Refresher on Lentils—And Why FBN℠ Is Slightly Bullish
FBN is overall slightly bullish for old- and new-crop lentils. The outlooks are tied primarily to the tightening of the Canadian balance sheet but also for the world outlook. FBN’s balance sheet sentiment is shared among other agencies, including STATpub and Agri-Food Canada. Canada needs higher planted area for 2020 given the current balance sheet situation.
Canada’s stocks are tightening in 2019/20, and again in 2020/21
Canada’s lentil stocks are projected to decline substantially in 2019/20. FBN sees stocks falling around the 250,000 tonne level based mainly on monthly exports for the remainder of the crop year. Production was up only marginally from 2018 and beginning stocks also were lower, which put total supplies at a multiyear low. Combine that with strong exports though March, and stocks are moving lower.
For 2020, FBN expects Statistics Canada to revise its acreage forecast higher. At 1.5 million hectares, penciled-in production will not be large enough to offset the smaller beginning stocks outlook, assuming a lower export program for 2020 still results in another year of tightening stocks.
Export and stocks scenarios for lentils
Statistics Canada reported August to March lentil exports at 1.5 million tonnes. That is the highest volume through March since the 2016/17 crop year. FBN looked at historical trends to come up with various scenarios for April through July exports.
Export Scenario 1
April-July monthly totals equal the average percentage shipped for the previous five years at 25%.
Export Scenario 2
April-July monthly totals equal the average for the previous five years at 127,500 tonnes.
Export Scenario 3
April-July monthly totals are 16% higher based on year-to-date exports being up 16% versus last year.
Export Scenario 4
Averaging scenarios (1) and (3) is the “middle exports” column in the table below.
What about the world situation?
Canada’s lentils ship mainly to Bangladesh, India and Turkey. Speculation about India’s crop size is surfacing with people in the industry leaning toward the government overstating the output for 2020. Further, the global balance sheet is moving tighter in 2019/20 and is forecast to do so again in 2020/21. STATpub gathers data from USDA, Statistics Canada, ABARES (Australia) and the FAO. The STATpub global balance sheet for 2020 has stocks tightening to a level not seen in years.
What this means for the Canadian farmer
Canada’s lentil prices have been rising overall in recent weeks. The market is expected to remain supported into the 2020/21 crop year. Statistics Canada could show a larger planted area in its next acreage report, but a potential increase would probably not be large enough to offset the tightening stocks situation. FBN expects pricing opportunities to remain present for lentil producers.
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