Export Competitor Picture is Hazy

It was only a few years ago that the size of Canadian crops was (almost) the only thing that mattered in pea and lentil markets. The main factors we needed to watch were Canadian acreage and yields and those items largely determined the direction for prices. It turns out that the success of the Canadian pulse industry has been contagious, with more export competitors emerging and expanding.

For peas, Russia has increased production in recent years and become a more important competitor. This has been very evident in the Chinese market, where Canadian market share has dropped from 86% in 2022 to 59% in 2023 and only 36% so far in 2024. Russia has also become a key supplier to India, now that its borders have reopened to pea imports, although Canada is still the largest source.

Russia has been increasing pea production in recent years and hit a record crop of 4.7 mln tonnes in 2023, which allowed it to boost exports to China and India. For the 2024 growing season, initial estimates had been for an even larger crop, possibly over 5.0 mln tonnes but drought and frost have reduced crop estimates closer to 4.0 mln tonnes, at least for now. The Russian pea crop is grown across a very large area and currently ranges from emerging to blooming, with some looking poor and some looking very good. Plenty of changes are possible.

Even though Russia will have fewer peas available for export in 2024/25, they will continue to pursue the Chinese and Indian market. It’s also worth noting that Russia has been the main supplier of peas to the EU but that will be curtailed as the EU imposes import tariffs on Russian crops starting in July. With that outlet to Europe shut down, Russian exporters will likely pursue Asian markets even more aggressively.

When it comes to competition in red lentil markets, Australia is the main country to watch. The first official estimates of the 2024/25 crop were just released, and indicated another large crop is expected, just over 1.6 mln tonnes. That said, rainfall has been scarce in South Australia, where roughly half of Australian lentils are grown. In the other main lentil-producing state of Victoria, conditions are considerably better. All in all, it’s still very early for the Australian crop and the yield outlook is still very uncertain but needs to be watched closely.

Early reports had indicated seeded area of lentils (both red and green) was expected to increase in Russia and Kazakhstan, but the main growing areas were very wet at the start of the planting season. It’s still not clear how planting delays may have affected lentil acreage in both of those countries.

Keep in mind too that US farmers were also reported to be boosting (mainly green) lentil acreage sharply, up 44% according to the USDA. In general, conditions in the two main lentil-producing states of Montana and North Dakota are considerably better than the last 2-3 years. But again, it’s still early.

It’s still too soon to know exactly how these pea and lentil crops will turn out and they’ll need to be monitored as the season progresses. Production for these pea and lentil export competitors is more important than ever when trying to sort out the market outlooks. This isn’t to say Canadian production is unimportant, just not as dominant as before. At the same time, it’s important to recognize that at this early stage, Canadian pea and lentil crops are looking quite positive in most areas, raising the potential for larger supplies here.

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