Lentil price to send pulses slowing
It's been fun while it lasted, but lentil producers will face prices at harvest well down on the heady levels of the past two years.
THE RATIONALE behind the decline in lentil prices is textbook supply and demand according to pulse industry insiders.
Lentil prices, above $700 a tonne in general last season, have fallen to be around the $440-460/t mark at present.
“We’re dealing with simple supply and demand,” said Pulse Australia chairman Ron Storey.
“Last year, we had a failed monsoon in India which meant there was plenty of demand, in spite of our monster crop here in Australia of over 700,000 tonnes.”
“This year, we’re again looking at a big crop, perhaps in the 400,000-500,000t range, which although lower than last year, is right up there historically, but the difference is India has had a better season, Canada has had a good year and there are plenty of lentils about.”
JK Milling pulse buyer Andrew Saunders agreed.
“The pipeline is full, there is good carryover from the old crop, the new crop does not look too bad and there have been good harvest in India and Canada, so the demand is not there.”
However, he said in historical terms, the current price was far from the lowest levels.
“We’ve seen lower lentil prices than this plenty of times,” Mr Saunders said.
Mr Storey said there had been a quantum shift in lentil production in Australia.
“We’ve seen Mallee producers plant the crop in increasing numbers as they have become more certain about it handling the often dry conditions there.”
“The extra plantings in both the Victorian and SA Mallee regions has really boosted overall lentil production in Australia.
Mr Storey said government policy in India was also having a trickle-down effect on the world lentil market.
“While there has been no Indian government intervention into lentil imports there are bans in place for the importation of black peas and pigeon peas,” Mr Storey said.
“These products, at some levels, are quite substitutable with lentils so having a dip in pigeon pea or black pea prices because of a lack of demand in those sectors will also drag lentil prices down.
“It is much the same as we see in feed grain, a poor corn price will have an impact on feed barley.”
Mr Storey said new exporters of pulses were emerging as well in line with the good prices on offer over the past few years.
“We are seeing exports out of the Black Sea region, where they are increasing productivity.”
On the marketing front, he said in spite of increased consumption of pulses in western diets, the subcontinent remains far and away the primary focus.
“If India sneezes, world pulse markets catch a cold, it is changing, but at present that is very much the case,” Mr Storey said.
In the medium term, Mr Saunders nominated March as the next potential period of volatility in the market.
“We’re probably getting to a stage where yields in Australia are set, there will be some early crop coming off very soon,” he said.
“With that in mind, the next period we could see a bit of uncertainty is with the new Indian crop, which is due for harvest in March.”
“Unless we see something serious there I would say we are unlikely to see prices rise as there are plenty of lentils in the system.”
Mr Saunders said he was predicting average or near average yields through Mallee regions and slightly better in the Wimmera, where the weather has been favourable.
Victoria and South Australia combined produce over 95pc of Australia’s lentils.