Lentils caught between weak Indian dal demand and record global supply

India’s pulses complex is currently driven more by fragile dal mill demand than by supply tightness, and this dynamic is increasingly relevant for the international lentil market. While urad, arhar and chana are under pressure in India, moong is holding steady, illustrating how demand-side weakness can cap prices even when government support is present. At the same time, record or near‑record lentil crops in Canada and Australia and still‑strong Indian import needs are keeping global trade flows active, but with limited upside for prices. India’s pulses market mood is cautious, with dal mills buying selectively and facing higher costs and policy frictions such as mandi taxes. This has already pushed urad and arhar lower, kept chana soft and left moong as the most resilient segment in the domestic complex. For lentils, especially red masoor that competes directly with other dals in Indian consumption, this environment implies a ceiling on near‑term price rallies despite structurally firm demand.

Prices & Market Snapshot

The Raw Text shows a sharply demand‑driven pulses market in India: urad and arhar are under pressure, chana is soft and range‑bound, while moong is stable thanks to balanced supply and government procurement. Dal mills’ cautious purchasing and rising operating costs are the key brakes on the complex, outweighing earlier price rebounds that had briefly lifted quotes up to MSP levels. In the international lentils segment, recent offers in EUR for key origins are broadly steady over the past month, reflecting that global prices have already adjusted lower after strong 2025 harvests:

• Canadian red football lentils FOB Ottawa at about EUR 2.58/kg, flat over the last four weeks.
• Canadian large green (Laird) lentils around EUR 1.75/kg, also unchanged.
• Canadian Eston green lentils near EUR 1.65/kg, stable.
• Chinese small green lentils at roughly EUR 1.18–1.25/kg FOB Beijing, with only marginal moves.

This stagnation is consistent with broader reports of pulses prices having fallen 5–20% in recent months on the back of large pea and lentil crops, particularly in Canada, Australia, Russia and parts of Africa. With offers from different origins converging, exporters appear keen to maintain attractive price levels to sustain demand.

Current Spot Prices (converted to EUR, FOB)

Supply & Demand Context

India: Demand‑Driven Pulses Complex Anchors Lentil Valuations

The Raw Text underscores that India’s pulses prices are being led by demand weakness, not supply tightness. Dal mills are buying cautiously, leading to downward pressure on urad and arhar and soft, range‑bound trade in chana. Moong alone is relatively steady, supported by government procurement and steady consumption. For lentils, this has two implications. First, masoor competes with other dals in consumer baskets; when chana, urad and arhar are under pressure, lentil price rallies may be capped as distributors substitute across pulses. Second, dal mill margins squeezed by costs and taxes reduce their capacity to bid aggressively for any pulse, including imported lentils. Recent Indian policy has reinforced the supply side: duty‑free imports remain in place for key pulses including lentils (masoor), urad and arhar, extended through March 31, 2026. This has facilitated a surge in total pulse imports, which climbed to around 6.5–7.3 million tonnes in 2024–25, with lentils one of the major components. However, the Raw Text makes clear that despite this flow, the market mood is still cautious because mills are the bottleneck.

Global Production: Record Canadian & Australian Crops

Canada remains the dominant global exporter of lentils, accounting for roughly one‑third to nearly half of world trade depending on the metric. Statistics Canada and prairie‑region analyses show that 2025 crop production for pulses, including lentils, was significantly higher year‑on‑year, with record or near‑record yields across the Prairies. This has left exporters with comfortable exportable surpluses going into 2026. Australia has also produced a very large lentil crop, with output in 2025‑26 projected to rise by about one‑third to record levels. Together, Canada and Australia provide abundant supply at a time when India’s demand is constrained at the processing level, reinforcing the soft tone in international prices.

Import Demand: India Still Central but More Price‑Sensitive

India remains the single most important demand centre for lentils. In 2024, its total pulses imports reached around 6.6–7.3 million tonnes, more than double the previous year, with masoor (lentils) imports estimated above 1.2 million tonnes as domestic output lagged consumption. The government has committed in principle to aggressive procurement and liberal import policies to curb food inflation. However, the Raw Text shows that, on the ground, dal mills’ weak buying is preventing this structural demand from turning into strong spot bids. Rising operational costs and mandi taxes are eroding mill margins, causing them to run at lower capacity and limit forward purchases. In this environment, Indian importers and processors are highly price‑sensitive, often waiting for dips or government‑linked buying before covering.

Fundamentals & Market Drivers

Price Levels vs. MSP and Historical Lows

Earlier in the season, Indian pulses—including some lentil categories—had seen a rebound, with prices rising up to 20% and touching MSP levels. The Raw Text indicates that this rally has largely stalled as mill demand faded. Urad and arhar have already rolled over, while chana remains soft and moong alone is holding its ground. Globally, multiple sources report that pulses prices, including lentils, have fallen to historically low or multi‑year low ranges in late 2025 and early 2026 after large harvests in Canada and Australia. This aligns with the flat week‑on‑week offers seen in the EUR‑denominated data for Canadian and Chinese lentils: the market has already repriced lower and is now consolidating.

Government Procurement & Policy Support

The Raw Text emphasises that government procurement at MSP for moong and urad continues to play a stabilising role. For lentils, India’s government has also pledged to procure significant quantities and has allowed duty‑free imports of masoor through at least March 31, 2026. In theory, this should underpin prices. In practice, as the Raw Text highlights, dal mill demand is the decisive factor. Even generous procurement policies cannot fully offset weak milling capacity utilisation. Until mills see better processing margins or clearer policy stability on taxes and levies, their cautious stance will keep the overall pulses complex—including lentils—in a capped and choppy trading range.

Speculative Positioning & Trade Flows

While detailed futures positioning for lentils is less transparent than for major cereals, reports from Canadian exporters indicate substantial forward sales into South Asia and the Middle East, especially to India, Bangladesh and Turkey. As these positions are lifted and rolled, any faltering of Indian physical demand could translate into more aggressive spot offers from origins. At the same time, India’s liberalised import regime has attracted large inflows of yellow peas, chana and lentils, some of which act as substitutes for each other in both retail and industrial channels. This substitution effect, combined with weak chana and urad prices domestically, suppresses the potential for a standalone lentil rally.

Weather Outlook & Crop Implications

Canada (Prairies)

Recent seasonal outlooks for the Canadian Prairies point to near‑normal to slightly above‑normal temperatures and mixed precipitation heading into spring 2026, after a largely favourable 2025 growing season that delivered strong lentil yields. Soil moisture profiles are generally adequate following decent autumn precipitation, though local deficits persist in parts of southern Saskatchewan. If these conditions hold, they support another solid lentil crop potential, especially given that growers responded to strong green lentil premiums in 2025 by shifting acreage in that direction. Weather‑related upside risk to prices from Canada therefore appears limited in the very short term; only a significant early‑season drought or excessive rains at seeding would materially change the balance.

Australia & Other Exporters

Australia’s lentil regions in South Australia and Victoria benefited from good rainfall patterns in 2025, underpinning the large crop now weighing on world prices. The latest outlooks suggest neutral‑to‑favourable conditions into mid‑2026, with no immediate signal of a sharp production drop. Emerging exporters such as Russia and Kazakhstan also reported higher lentil output in the latest season, with weather largely cooperative. Combined with Canada and Australia, this reinforces a broadly comfortable global supply picture unless a major weather event hits multiple origins simultaneously.

India

For India, the key weather focus shifts to the upcoming monsoon. Previous years’ El Niño‑linked variability hurt pulses output, contributing to higher imports and price volatility. At present, forecasts suggest a more neutral pattern, but the Raw Text makes clear that, for now, demand rather than weather‑driven supply constraints is setting the tone in the pulses complex.

Country Production & Stocks Comparison

*Approximate figures from recent global market and agency reports; for directional analysis only.

Global ending stocks of lentils are estimated to have increased modestly in 2025–26 as production growth outpaced demand, especially in export‑oriented origins. This stock cushion adds another layer of resistance to any near‑term price spikes, particularly while India’s dal mills remain cautious.

Outlook & Trading Strategy

Short‑Term Outlook (0–3 months)

The Raw Text signals a mixed but generally soft pulses environment in India: urad and arhar under pressure, chana weak, moong stable. Lentils are likely to mirror this pattern, trading in a capped range as long as dal mill demand remains subdued. Globally, ample Canadian and Australian supply, combined with comfortable stocks and competitive offers from Russia, Kazakhstan and China, argue for continued flat‑to‑slightly‑soft price action. Only a sudden improvement in Indian mill demand or a weather shock at a major origin would provide a strong upside trigger in the near term.

Medium‑Term Outlook (3–12 months)

Over the medium term, several potential turning points emerge:

• Upside triggers: A clear recovery in Indian dal mill margins and throughput, any tightening of India’s import policy, or weather‑related downgrades to 2026 crops in Canada or Australia.
• Downside risks: Continued weak procurement by mills, further gains in Australian and Black Sea lentil production, or aggressive discounting by exporters holding large stocks.

Given the Raw Text emphasis that the market is currently driven “more by demand weakness than supply strength,” the base case is for a sideways market with a mild downside bias until Indian processing demand meaningfully improves.

Trading Recommendations

• Importers in South Asia & MENA: Use current flat prices to extend coverage modestly, but avoid over‑buying given the soft Indian demand backdrop. Stagger purchases and keep some flexibility for opportunistic spot buying if further weakness appears.
• Dal mills in India: Prioritise margin protection. Given soft urad, arhar and chana prices and stable moong, focus on product mixes that maximise throughput at least risk. For lentils, buy hand‑to‑mouth until clear signs of demand‑side strengthening.
• Producers in Canada & Australia: Consider incremental hedging on price rallies, as global stocks and India’s cautious mills limit upside. Maintain quality differentiation (e.g., premium green lentils) to protect basis levels.
• Traders & merchandisers: Exploit inter‑origin spreads and grade differentials rather than outright flat‑price exposure. With prices converging across origins, logistics and financing efficiencies can be a larger profit driver than price appreciation.
• End‑users / food companies: Lock in forward supply for 6–12 months where possible to secure low input costs, especially for green lentil‑heavy formulations, while preserving some optionality for formulation shifts if relative prices between lentils and other pulses move further.

3‑Day Regional Price Forecast (EUR/kg, indicative)

Given the dominance of demand‑side weakness highlighted in the Raw Text, these short‑term forecasts assume minimal price volatility and no major policy surprises within the next few days.