Carryover a Small but Important Part of Supplies

The outcome of the 2023 harvest is front and centre for pulse markets; that’s obvious. Drought-reduced yields have triggered large changes in the outlook for 2023/24. Despite the smaller crops, prices haven’t reacted much yet. There are a few factors behind that lack of response, including the size of supplies carried over from the end of the 2022/23 marketing year.

Official July 31 ending stocks estimates will be issued by StatsCan in early September and will be subject to the usual debate and disagreement. In the meantime, we’ve put together our best guesses of 2022/23 ending stocks. We’ve split out our estimates into major types of pulses because the markets for those individual classes are very distinct; an overall stocks number isn’t as useful.

We’re estimating total 2022/23 pea ending stocks at 485-490,000 tonnes. Exports had been moving at a decent pace earlier in the year but dropped off sharply in the final quarter of 2022/23, leaving stocks up considerably from 2021/22 but lower than 2020/21. Keep in mind though, the breakdown by type is quite different in 2022/23. Compared to 2020/21, when green pea ending stocks were at a multiyear high, they’re a lot lower in 2022/23, which helps explain the current price premium for green peas relative to yellows. On the other hand, ending stocks of yellow peas are expected to be the largest since 2017/18, keeping pressure on those prices.

The chart also shows projections for 2023/24 ending stocks, although there’s a lot more uncertainty with a whole year of developments that can change the outlook. In general though, the sharper drop in 2023 green pea acreage and reduced yields will result in very tight ending stocks. The yellow pea crop will also be smaller than last year, but there’s also a chance demand could be softer, which would leave comfortable stocks on hand.

For lentils, we’re looking at 2022/23 ending stocks of 230-235,000 tonnes, only marginally more than 2021/22 and at the lower end of recent history. We’re estimating green lentil stocks will be the lowest since 2017/18, which is reflected in stronger green lentil bids. Red lentil stocks are estimated up a bit from last year but still not historically large. The difference in 2022/23 has been the presence of large supplies of Australian red lentils which have weighed on prices. This low carryover of both greens and reds means there was no real cushion heading into 2023/24, which will make the supply situation even more critical in the coming year.

Looking ahead to projected lentil ending stocks for 2023/24, it’s worth noting that StatsCan showed a large drop in red lentil acres for 2023 while an increase was reported for green lentil acres. That’s likely going to lead to tighter red lentil stocks while green lentils could see a small increase in 2023/24 ending stocks. Both will be historically low though. New-crop bids really haven’t reacted to those prospects yet, as export demand has been quieter lately. But it’s clearly worth watching.

In the weeks and months ahead, pulse prices will show more response to the smaller Canadian crops and low supplies. Production estimates will get dialed in and give more clarity to the supply situation. At the same time, export demand will adjust to the new reality and will help determine price potential.

Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.