Pulse Market Insight-Lentil

In its latest stocks report, StatsCan made some adjustments that changed the lentil market outlook considerably. The report was based on a survey asking farmers how many lentils (and other crops) they had in their bins as of December 31st. These on-farm supplies are added to commercial stocks provide the total supply.

After accounting for imports and exports, StatsCan then estimates how many lentils were consumed domestically. In its latest Supply & Disposition table, StatsCan went back a few years to make some minor adjustments and made larger changes in the 10/11 and 11/12 domestic use category. The net result was a 90,000 tonne drop in 2011/12 ending stocks, which then carries forward to affect the 2012/13 marketing year.

The biggest change to the outlook came from StatsCan’s “other domestic” use estimate for the Aug-Dec period of 2012. For those five months, StatsCan pegged other domestic use (mostly feed and waste) at 350,000 tonnes, by far the largest volume ever.

That said, big feed/waste usage in both 2011/12 and 2012/13 make sense. After all, 55-60% of the huge 2010 lentil crop ended up an X3 or lower grade. A good chunk of the estimated 1.1 million tonnes in that category had been hanging over the market and much of it eventually made it into the feed channel.

If these StatsCan estimates are reliable, the impact on ending stocks is significant. Previously, we had been looking at 2012/13 ending stocks at 800,000 tonnes. Some people had argued that the low-quality lentils distorted the real supply outlook. Even though many of those poor-quality lentils wouldn’t have made it into the export channel, they still made the situation feel heavy especially in the minds of export buyers who saw that Canada had “lots” of lentils.

Now with the big domestic use volumes shown in the StatsCan S&D, 2012/13 ending stocks could actually drop below 400,000 tonnes. The stocks/use ratio of 21% isn’t exactly tight but it’s certainly a large improvement over the earlier outlook.