Marketing Lentils

[lakenheath]

Greg Kostal is telling farmers to be 50% sold on lentils right now. In the news we are hearing of quality and yield wrecks all over the province. He figures there is not much upside in lentils prices. With Saskatchewan being such a large player in the world lentil market, this doesn't make sense to me.

Any thoughts out there? I would put money on a price rally, but then again I have been quite wrong on lentil marketing in the past.

[JDGreen]

Market will rally.. Kostal is DEAD wrong again. I am not concerned about lentil prices when i haven't even got them in the bin yet. Lentils grade on a sliding scale at any rate. Last years X3's will more than likely be looked at as borderline 1's this year.. If this area is having problems with lentils then the problem is much much bigger from my experience across the province. I would like to know what Larry Weber thinks of this.. oh LARRY where are you???

[jamesb]

From a volume propective I dont think we are going to be short in the world of lentils but from a quality side, I think there is a serious issue. the market is going to have to figure out absorbing the huge volume of low grade lentils. Someone will always buy the stuff it all trades at some price.
I wonder about all the contracts made for a 2 or better sample that processors made in the winter.

[fjlip]

When canola quality was poor in '04, the whole world heard and buyers stayed away. No rally due to poor demand. Everybody will soon know of our "wreck", so severe discounts for grade could happen. The contracts must have 2 or better delivered, no quality adjustments?

[sumdumguy]

How many people have act of god in their forward sales? My prediction is that too many marketers presold 2 or better, now they will have a problem filling. Been here before.

[wmoebis]

And when the market can't supply who's fault is it? The producers for signing a contract they can't forefill or the marketer for selling something he never had? Who's reputation and credibility is on the line and who will pay in the end?

[btjadenlepp]

heard this week that at least one
processor has had to buy out contracts,
as in they sold to an end user and now
won't be able to source the stuff from
the producers they contracted with. that
would be a painful transaction.

i love act of god clauses for farmers,
but i don't think there are very many
end users who take on that risk, leaving
the processors holding the bag every
time. the problem they have is that it's
expected in the industry now, so how do
you get the seed in the ground and the
guaranteed origination, without them?

[cottonpicken]

Is the farmer obligated to sell the first higher quality
stuff on their contract or can they sell the poorer stuff?

[btjadenlepp]

the contracts usually fix a price for
the first 10 bu/ac yield on stated
acres, which would limit your ability to
play around with different qualities.

i'm also pretty sure that a worse-than-
no.2 nullifies the contracts. we've
asked for feed discounts to be written
in ahead of time, but feed lentil
markets are miniscule; and all the main
buyers deal offshore.

[JDGreen]

i just added another 1000mt of crap to the market this morning.. Sorry guys.. Couple more days of this and I will add another 1000