Lentils under Pressure: Bearish Harvest, Bullish Risk from India’s Monsoon

Favourable crop prospects in Canada and Australia are keeping a mild bearish tone in global lentil prices, but India’s weak monsoon and potential shortfall in tur (pigeon pea) remain key upside risks for import demand later in the season. Lentil markets are currently balancing comfortable forward supply from the two largest exporters against growing concern over India’s kharif pulse outlook. Good soil moisture and timely field conditions in Canada, together with expectations for another strong Australian crop, are reinforcing views of ample export availability. At the same time, India is entering the 2026 kharif season with a sharp June rainfall deficit that could curb domestic pulse production and eventually lift lentil imports if tur yields disappoint. Near‑term sentiment is soft, but weather in India and subsequent buying decisions are likely to determine whether today’s modest price weakness persists into Q4.

Prices

Export indications in North America are edging lower on the back of improving new‑crop prospects. Canadian FOB Ottawa quotes in late June show a gradual easing across major classes: Laird green lentils around EUR 1.45/kg, Eston green about EUR 1.40/kg, and red football near EUR 2.35/kg, all modestly below early‑June levels. This reflects the shift from weather uncertainty toward expectations of another healthy 2026 harvest.

Chinese small green lentils (FOB Beijing) are slightly firmer, with conventional product near EUR 1.20/kg and organic around EUR 1.26/kg, up a few cents from mid‑June. The divergence underscores how Canadian and Australian supply expectations are directly weighing on their own price structure, while Chinese offers are more insulated and niche‑oriented. Overall, global price direction is presently gently lower, not collapsing, as the market waits for clearer signals from South Asian demand.

Supply & Demand

In Canada, lentil crops are progressing well under favourable weather, supported by good soil moisture and timely field conditions. This is boosting confidence in production prospects for the 2026 season and underpins expectations of another healthy exportable surplus. Official outlooks also point to solid lentil area and the potential for trend‑level yields, keeping supply risk relatively low as of late June.

Australia is likewise on track for a strong season, with government and industry estimates signalling a very large, potentially record, lentil crop in 2026/27. Recent analysis highlights expanding lentil area and good early‑season rainfall in key South Australian and Victorian growing belts, consolidating Australia’s role as a major supplier into South Asia and the Middle East. Combined, Canada and Australia are setting the stage for intense export competition once new‑crop volumes enter the pipeline.

On the demand side, India remains the pivotal buyer. Lentils are one of the closest substitutes for tur (pigeon pea) in Indian consumption, so any shortfall in tur availability tends to redirect demand into imported lentils. For now, end‑users are cautious; but if domestic pulse production underperforms, particularly in tur, import requirements for Canadian and Australian lentils could rise sharply later in the marketing year.

Weather & India Pulse Outlook

India’s 2026 monsoon has started poorly, with June rainfall running roughly 40–43% below the long‑period average nationwide, making it one of the driest Junes in decades. Central India and eastern pulse‑growing regions are among the worst affected, with deficits above 50% in some areas. This has already slowed kharif sowing, with government data showing total planted area lagging last year by more than 20% as of late June.

Emerging El Niño conditions and official guidance suggest only a partial recovery of rains in July, implying that cumulative seasonal rainfall is likely to remain below normal. This pattern heightens the risk of lower kharif pulse yields, especially for tur, which is highly sensitive to early‑season moisture. If these deficits persist into the critical July–August window, India may be forced to increase lentil imports later in the marketing year to compensate for tight tur supplies, turning today’s soft market into a more balanced or even firmer one.

In contrast, recent assessments for the Canadian Prairies point to generally adequate soil moisture and mostly favourable growing conditions, with no widespread drought stress flagged so far. This supports the optimistic production outlook described by local market participants and reduces near‑term upside weather risk for North American lentils.

Fundamentals & Market Drivers

• Exporter competition intensifies: Healthy crops in Canada and Australia mean both origins will compete aggressively on price and quality, particularly into India, Bangladesh and North Africa. This is already visible in softer Canadian FOB values despite firm logistics and currency costs.
• Indian demand is the swing factor: Below‑normal rainfall, delayed sowing and uncertainty around kharif pulse output are likely to keep Indian traders cautious in the short term but may trigger a pronounced import wave once crop prospects are clearer. Tur’s role as a staple and lentils’ status as its closest substitute amplify this risk.
• Stocks and old‑crop overhang: Reports from Australia indicate that part of last year’s large lentil crop remains unsold, adding to exportable inventories at a time when new‑crop prospects are strong. This stock overhang is a further cap on near‑term price rallies.

Trading Outlook

• Buyers (importers, feed and food processors): Use current price softness to secure a portion of Q4 2026 and Q1 2027 coverage from Canada and Australia, but keep some volume open to benefit from any further downside if Indian imports are delayed.
• Producers in Canada and Australia: Consider scaling in pre‑harvest sales on rallies, given strong export competition and the sizeable potential Australian crop. Maintain flexibility on a portion of production in case India’s monsoon shock triggers a late‑season price rebound.
• Traders: Watch Indian monsoon updates and tur crop assessments closely. A sustained rainfall deficit through July could quickly shift market tone from bearish to neutral or mildly bullish, particularly for higher‑quality green lentils that are more directly substitutable in Indian demand.

3‑Day Price Indication (directional)

• Canada FOB Ottawa (green & red lentils): Slightly soft to sideways in the next 3 days, with ample crop prospects limiting any short‑term bounce.
• Australia FOB ports: Sideways bias; domestic weather is supportive, but export demand remains measured while India stays on the sidelines.
• South Asia (CIF Indian ports): Mostly stable USD/EUR‑adjusted replacement values; any notable firming will likely await clearer signals on kharif pulse yields and government import policy.