September 13, frost has descended over the prairies essentially putting an end to another harvest season fraught with surprise and disappointment. As wet weather delayed harvest again this year, many were anticipating another quality disaster like 2010. Green Lentils produced better quality and lower yields than expected in many areas. Reds and small greens had huge crops in some areas where others were left with nothing. Markets have reacted supporting green lentils while pulling the plug on red prices. The question, of course, is where do we go from here? It’s hard to be bullish on Large Greens and bearish on every other commodity. My feeling is that we will find a bottom on special crops in the coming weeks and it won’t be that bad. Farmers will have settled into their bin and cash needs, buyers will start marketing their cargo overseas. The remainder of September will be a month to assess the unsold quality and quantity on farms and get down to the practice of actually marketing the crops to international markets. Hopefully, we all remember how to do that.
Rain continues to fall in the same precipitation pattern we have seen through the growing season. Heat evaporates moisture in the ground which subsequentially rains torrentially back on the crops 3-4 days later. This pattern is predicted to continue through harvest. Farmers are struggling. The assumption is 20% of acres will not be harvested. This is not a surprise. Areas that were hit, were hit hard with flooding and have been taken out of potential production for weeks. The reigning concern is the 80% of fields in various levels of distress from the excess moisture. As harvest begins, we are noting the following.
- Initial quality is better than expected.
- Yields are worse than expected.
We are expecting to receive our initial production contracts but believe the expected abundance of lentils will now be reduced by half creating a supply situation similar to 2015. While Canada’s harvest prospects are similar to 2015, changing dynamics in other production areas of the world have not gone un-noticed. In particular, the sub-continent buyers are taking a much different tact with this year’s crop. With millions of MT lentil and pea contracts on the books, sub-continent buyers are looking at decent crops from other origins and a strong production potential from their next crop. Despite our situation, Canadian contracts are appearing more like a liability than a welcome delivery. The change in tone is leaving the market searching for answers. The future direction will not likely come until September when definitive picture of quality and yield reveals itself.