Lentils 2007

[lakenheath]

Charlie,

Any rumblings about forward contract prices for 2007? I am hearing 16 cents for #1 Large Greens. Not quite attractive enought for me yet. American acres are supposed to be dropping (Richlea mostly are grown I believe).

Someone is supposed to be proposing a marketing board for Lentils at the Crop Production show. Should be interesting. We should be a price setter in the world of lentils yet we seem to be a price taker. Totally different beast than wheat and durum. Should be interesting. Hopefully people have open minds to the idea.

What is your take Charlie, or anyone else for that matter.

[parsley]

Thought you'd never get around to it.

Sounds like a plan as long as they also provide farmers with:

1) An inside track on information about investing in stocks on leg irons
2)Additional training expertise for Canada Customs officials on border runners
3)Ms. Wendy Holm's expertise garnered from her close close Cuban contacts
on how state marketing is necessary.
4) A presentation by Stephane Dion's right hand advisor-David Orchard, so we better understand the importance of the place of the state in thinking more clearly while chained.

Parsley

[lakenheath]

I repeat.

Hopefully people have open minds to the idea.

You usually have valuable posts Parsley. What happened?

It is not the CLB (Canadian Lentil Board). Just an option maybe. Get back down from off the ceiling Parsley! Have you enjoyed lentil prices for the past 2 years even though we are the number 1 producer in the world.

Do you grow Lentils Parsley?

[parsley]

I measured the value of the proposition and answered it like I thought Boarat would.

We grow French lentils. Red lentils. Laird lentils.

Parsley

[parsley]

Sorry. That should be Borat.

[TOM4CWB]

Lakenheath,

A lentil markeing co-operative is what you meant?

If it is, and it is voluntary... perhaps I might even be interested... As long as it is not connected with the present CWB structure and "single desk"!

Sask Pulse has done some very interesting studies on lentil marketing... that reveal interesting marketing issues.

I found it revealing last year to find out that the AWB dropped pulses from their marketing programs...a few years back: have any been added back into their marketing program?

PERHAPS we could get a down under perspective on pulse marketing and large co-operatives like CBH marketing them?

[charliep]

Will take a crack at.

DEMAND SIDE - Lentils are interesting in that they are more than one market. Realize you are highlighting large seed but are also all the other markets (small, medium, french, red, etc.). If you divide up into grade, the number of markets and customers expanding accordingly. With the exception of a few markets, it is also very easy substituted with other pusles/vegetable sources of protein. For the poorest people of the world, pulses are easily dropped out of diets and replaced by things that simply fill stomachs. Could a CLB squeeze more money of the market by withholding supplies? Likely could but the sacrafice will be volume. Less volume/more stored and customers replacing what you would have sold them with other pulses/food sources. Ability to differentiate markets via price - I think the pulse market does a good job of that today in an open market.

RISK MANAGEMENT - Will note the biggest problem today with pulses is that it is a strictly cash market with no tools to help people manage price risk. When someone offers you 16 cents/pound today for next fall (a processor I am assuming), have they backed this sale up with a end users commitment/price? If they aren't, they are carrying price risk. Similarly, if a processor sells to an end user without a farmer contract, they are carrying price risk. Their margins have to be wider to handle this risk. Could a CLB do a better job here or would it simply be like today where farmers grow lentils on spec and hope for higher prices in the fall? Would it do like with mustards (mainly yellow) where some of the higher valued/consistent customers are willing to contract some for higher prices prior to seeding? All good questions.

LOGISTICS, INVENTORY FINANCING AND PAYMENT RISK MANAGEMENT - If you look at the CLB from a supply chain approach, is there value the CLB could bring to all members of supply chain to deal with everyones risk, capture profit (increase revenue/reduce cost) and improve the industries ability to satisfy customers needs? Does it have to be compulsory for producer and processors? Does it have to have price pooling as a central feature?

[TOM4CWB]

Charlie,

I believe Agricore United's Alberta Bean contracting, processing, and pooled sales system all prove that co-operation can bring real value to all partners in the pulse industry... without a compulsory element being required.... other than contact law.

It has worked for many years... and proves voluntary dual marketing systems can thrive and prosper!

[lakenheath]

Definately voluntary. I guess when you throw out the word "board", voluntary is not exactly the first thing that comes to mind (sorry to raise your blook pressure Parsley).

If anything a CLB might provide more marketing information to producers. I feel left in the dark marketing lentils. There is very little information out there that I can base my marketing decisions on. But, maybe I am not looking hard enough.

Anyway, have you heard any reports on pricing coming into 2007 (Charlie)?

[charliep]

Haven't heard any yet although your quote seems like an initial spot to start. Crop production days is where I start to hear more quotes. As you suggest, I wouldn't be excited about forward contracting at 16 cents/pound.

Just out of curiousity, are grades for other than number 1 quality included in the contract or agreed to at the time of delivery?

I know from other conversations that price discovery, risk management and payment/contracting security are major issues for pulse growers. Has anyone looked at using the private sector risk management program to look at marketing system alternatives? Below are the links to the website/other projects under way.

http://www.agr.gc.ca/brm_gre/psp/index_e.cfm

http://www.agr.gc.ca/brm_gre/psp/index_e.cfm?page=intro

[charliep]

In my question, should be grade spreads. Is the contract for No. 1 long seed only? Do you know the spread if you get No.2/No.3/Extra 3, etc.? Is it established at the time of delivery?

[lakenheath]

I would have to do some digging to answer your question. I have not forward contracted lentils in the past. I have a friend that has done quite a bit but without a whole lot of success (I will ask him the details and get back to you).

Seems like the forward contract offers at the Crop Production Show seem to come in lower than the next few months prices.

[cottonpicken]

Lentils=the most frustarating crop ever

[lakenheath]

What crop isn't frusterating lately?

[just_wondering]

Just got back from pulse days I missed a few sessions but a Canadian lentil board was not broght up on the 8th or morning of 9th
The thoght of a clearinghouse like barley is looking at will that help? Many I talked to felt that price discovery through a futures board might be worth looking into.
Tom that study you referenced on green lentils was presented "Market risk, Management tools for green lentils" Marlene Boersch should be on Sask pulses website.