Lentil prices skyrocket on speculation of India reducing tariffs

Lentil prices have risen to $900 a tonne. See what’s driving the market.

A shortage of supply of pulses in India has helped push lentil prices through the roof at the moment.

Speculation India may soon reduce tariffs on imported pulses combined with market realisation that suppliers Australia and Canada will soon run out of lentils have sent the grain’s prices skyrocketing.

Prices hit $900 a tonne delivered Melbourne two weeks ago but have settled back to about $860 a tonne in the past few days.

But Todd Krahe, a lentil trader with global trading company ETG, believes prices may rise again to $900 a tonne in the coming months due to market speculation.

“Over the next six months, the market will remain very firm,” Mr Krahe said.

“We will see more upside again and approach that $900 a tonne price very soon.”

Mr Krahe said there had been a “lot of chatter” in the markets that India would reduce its import tariffs in the wake of rising food prices in the country.

He said the lentil market “got excited” and prices rapidly rose from $700 a tonne in the Wimmera to nearly $900 a tonne over six to eight weeks.

“But it has now corrected to about $830 a tonne, delivered Wimmera, as there has been no official announcement yet (by the Indian Government),” he said.

Other factors affecting the lentil market were a shortage of shipping containers and marketers realising both Australia and Canada are likely to run out of the pulse grain for shipment by August or September.

“Whenever we see that supplies are going to get so tight, we get a run up in the market,” Mr Krahe said.

Australian Grain Export pulse trader Will Alexander said it was “very hard to sell anything at the moment”, given the shortage of shipping containers.

“There is not much trading of lentils going on at the moment,” Mr Alexander said.

Mr Krahe said there was still plenty of stock being held on farms, but growers were prepared to hold off until the next financial year.

“Growers got good prices for their wheat and barley at harvest, so they are in no hurry to sell,” he said.

Mr Krahe said he expected the Victoria area planted to lentils to rise about 15-20 per cent this season as a result of the high prices.

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