Canada Markets

Lentil prices have indicated a harvest rally in the past week, perhaps an indication of growing discomfort among industry buyers with the crop's potential as the harvest pushes forward. As indicated on the attached chart, large, medium and small green lentils, as well as red lentils, have turned higher towards late-summer highs when supplies were near non-existent.

Despite an estimated record planted acreage of 3.87 million acres, up 24% from the previous year, Statistics Canada's recent production estimates suggest Prairies' production at 2.083 million metric tons, up only 4.8% from the previous year's estimated production. Variability in crop yields will see the guessing game surrounding the Prairies' 2015 production potential continue for some time.

Higher prices are also seen despite aggressive producer deliveries. While the Canadian Grain Commission's weekly statistics focuses on product delivered into licensed facilities and only partially explains what is happening, cumulative deliveries into elevators as of week 3, or the week ending Aug. 23, totaled 54,100 metric tons, 72.8% above the same week last year and 116% of the average cumulative deliveries for week 3 over the past two years. Commercial stocks, on the other hand, have not risen as quickly, reported at 45,700 mt (licensed facilities only) which is 44.9% higher than last year and 39.5% higher than the two-year average.

Large green lentils are leading the move higher, with Wednesday's Saskatchewan producer bids delivered to processing plants at 42.44 cents/lb, up from 24.13 cents this time last year and 66% above the five-year average for a similar point in time, as reported by Statpub.com and Saskatchewan Agriculture. The 2014/15 weekly high was reported at 44.94 cents as seen in the week of July 15, a period of time when supplies were extremely tight. As well, red lentils are bid at an average of 36.03 cents/lb, up from 26.39 cents this time last year and 67% above the five-year average.

Barring a surprise in Thursday's Statistics Canada report, ending stocks as of July 31 will be reported extremely tight which will leave total supplies for the upcoming year at a level close to the tightest seen in the past five years.

Weather in India will continue to be watched closely in order to gauge demand for Prairies' pulses. DTN forecasts suggest the possibility of an early withdrawal of the June through September monsoon season, currently reporting a cumulative amount of moisture received which is 12% below long-term average across the country, according to the India Meteorological Department June 1 and Sept. 2. Major lentil growing areas of north-central India are largely rated as moisture deficient (20% to 59% below long-term averages) which could lead to problems with the Rabi or winter crop for the second consecutive year. 2014/15 Rabi pulse production was almost 1 mmt below target while 1.7 mmt below 2013/14 production.

DTN 360 Poll

This week's poll on our home page asks what you think of Statistics Canada's July 31 production estimates for all crops; have they under or over-estimated the crop? DTN thanks all those who have responded to past polls and look forward to your contributions in the future!

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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