Over the past month, SA lentil markets have benefited from strong bulk export competition and a lower Aussie dollar. Delivered lentil prices have increased $40-50 a tonne, now priced about $1050-$1060/t delivered to major ports. A 6 per cent decline in the Aussie dollar in the span of a month has been the primary component of our lentil price lift.
Bulk shipments are a priority for buyers; the June-July period appears to be the next window of opportunity for bulk lentil exports, with Australian exporters taking advantage of competitive market share ahead of the upcoming Canadian crop in Aug/Sep. Meanwhile, containerised market traders continue to face challenges of container access and high prices. Locally, growers have been busy with seeding which has resulted in lower selling volumes, lending further price support to the lentil market.
Aussie lentil exports for the marketing year to date have maintained a strong pace, akin to that of 2020/21. The current trajectory indicates a total of 890,000t of lentil exports for the season, roughly 90,000t more than what's achievable with lower carry-in stocks. Export pace will likely slow from July as stocks dwindle and price further rations demand. Competition will also likely arise from Canada as their harvest begins in late August.
Canadian planting for lentils is expected to rise about 4pc this year according to Stats Canada, driven higher by strong market prices, higher fertiliser costs and a modest switch away from peas. For Canadian growers, after many years of high pea plantings, the crops are showing higher potential risk of disease relative to lentils, and there is lower seed availability.
Despite the increase to lentil area, the current lentil production forecast is around 2.4 million tonnes with an expectation of slightly below-average yields (vs 2.5mt in a normal year). After the devastating drought of 2021/22, it will take some time for the soil moisture profile to sufficiently recover.
Additionally, snowstorms in late April and early May have caused delays to seeding in several regions. The growing period is already very limited, so additional delays or adverse weather will negatively impact yield potential.
In Saskatchewan, Canada's primary lentil growing area, planting for all crops was reported at about 14pc, behind the five-year average of 23pc. Some regions remain very dry, yet the eastern half of the province has been too wet for seeding. Snow melt in the east has helped to ease the average soil moisture deficit, but more is needed before the outlook on the Canadian lentil crop improves.
Lentil markets will be carefully watching the Canadian crop to piece together a firmer outlook on price direction. There is no wriggle room for an adverse spring in Canada. New crop prices in SA will take direction from Canada's crop, now priced in the low $900s. If the weather is not kind (in Canada or Australia) we will likely see new crop prices pick up.
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