January 2017

Happy New Year!   As I look toward January 1, I am feeling a greater sense of discomfort rather than optimism as we cross into 2017.   Many of the things we took for granted for the last few years no longer look so solid.   Of course, all things change and our job is to continually rebalance our positions for future market changes.    When I look into 2017 I see some of the usual ones.   What will growers plant?  Is there enough/too much soil moisture?  What will be the stocks in September?   These are complicated and moving targets, but ones that are accepted and managed.   Other trends, starting with the populist governments elected in the USA, UK, India, Venezuela to name a few are worrisome.   The systems and institutions that global traders holds dear look like they are about to be severely tested.   Indians and Venezuelans cannot trust the currency that they hold in their hands.   Countries around the world are pressuring to impede the flow of foreign goods and citizens at every turn.   Will India renew phyto agreements for fumigation or follow the letter of the law and throw the market into chaos?  What will the US do in 2017?  How will Canadians and our trading partners become caught in the cross-fire?   Normal people are musing about the probability of a nuclear bomb being dropped in 2017.   These are things no one has had to include in their thought process for a long time.     It will take at least until mid-year to understand where there is a hint of solid ground to trade from.   Until then the market looks a little too much like a roulette table for my comfort.

December 2016

December 2016

I waited for the Dec 6 numbers before writing this post.   Harvest conditions and subsequent quality have made it very difficult to accurately predict what was produced and what remains to sell until our new crop arrives in September 2017.   He are some extrapolations.

Lentils (2017 Production) – With zero carry-in lentils have enjoyed a good run during the first quarter of the marketing year.   However, those ideas are starting to run out of steam and indicate a more relaxed mood for the market for the remainder of 2017 and into 2018.

Large Green  Supply 538K;  With total usage expected around 520K – It is easy to predict that large green lentils will continue to retain a premium as stocks diminish through the first half of 2017.  Growers have high expectations after experiencing several years of grower prices around $70 ($1300 CIF)  Even with new crop at a 35% discount there will not be enough to satisfy basic demand and should leave the market relying heavily on Canada’s new production in the fall.

Small Green 260K;  Annual demand for Small Greens should remain around 150K.   Prices for this size have increased disproportionately with its S+D as they move in sympathy with the large green lentils.   A recent relaxation in duty from North Africa has kept demand up, but the supply should be adequate enough to limit the market’s ability for further price increases.

Red Supply 2,483K; Canadians have finally relinquished control of the red market to the fate of Indian market dynamics for the foreseeable future.  With new crop shipments filling the pipeline, new supply from Australia, fresh acres on the way from India, and no reason why Canadians will limit their seeding in the spring, we are off to a year of more relaxed prices unless we have a production failure.

Have a safe and happy holdiay.