Red Lentils Market: 5 Essential Insights as Canada Slashes Prices While Australia Stands Firm

Summary

The global red lentil market is experiencing divergent pricing strategies between major exporters Canada and Australia. While Canada has reduced its prices below $700 per tonne, Australia maintains firm pricing due to lower production volumes and preferential trade agreements with India. This market intelligence report analyzes these dynamics and their implications for importers across key Asian and Middle Eastern markets, providing valuable insights for stakeholders in the global pulse market.

Global Supply Dynamics Driving Price Strategies

The red lentil market is witnessing an interesting strategic divergence between two major global suppliers. Canada has recently reduced its red lentil prices, dropping below the $700 per tonne threshold in a bid to stimulate demand and reduce inventory levels. The price reduction amounts to $10 per tonne for shipments to India and $15 per tonne for buyers in Sri Lanka and Turkey.

This price adjustment reflects Canada's current supply position. With estimated production of 1.8 million tonnes of red lentils but exports of only approximately 500,000 tonnes so far, Canadian suppliers face significant inventory pressure that necessitates competitive pricing strategies. Industry analysts suggest that this aggressive pricing approach aims to accelerate Canada exports before the new harvest season begins.

Australia's Contrasting Approach

In stark contrast, Australian suppliers are maintaining their price levels, exhibiting remarkable pricing discipline despite market pressures. Several factors support this steadfast approach in the Australia trade landscape:

1. Lower-than-expected production: Australia's red lentil harvest has reached only 1.1 million tonnes, significantly below initial forecasts of 1.7 million tonnes. This production shortfall has naturally limited available export volumes.
2. Strong export performance: Australia has already exported around 570,000 tonnes of lentils between December 2024 and February 2025, with India alone accounting for 275,000 tonnes. This robust export performance has depleted domestic inventories, enabling suppliers to maintain price discipline.
3. Preferential trade agreement: Australia enjoys a competitive advantage through the Economic Cooperation and Trade Agreement (ECTA) with India, allowing export of up to 150,000 tonnes of lentils at half the import duty imposed on other origins. This tariff advantage began when India implemented a 10% import duty on lentils from April 1, creating a significant structural advantage for Australian exporters in the global pulse market.

Current Price Points Across Markets

The current price offerings across different markets reveal the regional strategies of both major suppliers in the red lentils trade:

Canadian offerings (June-July delivery):

• India: $685 per tonne
• Sri Lanka: $680 per tonne
• Turkey: $700 per tonne

Australian offerings:

• India (June-July): $690 per tonne
• India (May-June): $685 per tonne
• Pakistan/UAE (May-June): $690 per tonne
• Bangladesh (May-June): $710 per tonne

These price differentials, while seemingly minor, can translate to significant cost impacts for large-volume importers who typically procure in quantities of thousands of tonnes. A $10 difference per tonne on a 5,000-tonne shipment represents a $50,000 variance – substantial enough to influence purchasing decisions in the competitive global pulse market.

Impact of Import Duties on Market Dynamics

Import duties continue to play a crucial role in shaping trade flows in the red lentils market. India's implementation of a 10% import duty has created a tiered market system where Australian suppliers enjoy preferential access. This policy-driven advantage allows Australian exporters to maintain higher prices while remaining competitive in the Indian market.

For traders without access to preferential duty arrangements, the additional cost burden significantly impacts landed costs and margin potential. This highlights the importance of understanding regulatory frameworks when developing procurement strategies for pulses.

Market Outlook and Implications for Importers

The red lentil market is expected to maintain relatively soft pricing at least until May 31, when India will make a crucial decision on yellow pea import duties. This decision point could significantly impact the broader pulse market dynamics, as yellow peas have emerged as a popular substitute that influences pricing across the pulse spectrum.

For price-sensitive buyers, Canadian yellow peas represent an alternative option at $440 per tonne for June-July delivery to India. Even more competitive offerings are available from Ukraine and Russia at approximately $395 per tonne, further complicating the procurement landscape.

Chinese importers face a different scenario, with Canadian yellow pea offers at $370 per tonne competing against Russian offers at $400 per tonne. However, the 100% tariff on Canadian yellow peas significantly impacts competitiveness in the Chinese market, demonstrating how import duties can fundamentally reshape market dynamics and trade flows.

Sourcing Strategies for Pulse Importers

For pulse importers navigating this complex market, several strategic considerations emerge:

1. Timing optimization: With divergent pricing strategies between major exporters, importers must carefully time purchases to capitalize on optimal market conditions.
2. Origin diversification: Maintaining flexibility between Canadian and Australian origins allows importers to leverage competitive dynamics.
3. Duty advantage utilization: For Indian importers specifically, maximizing allocation within the ECTA quota system presents significant cost-saving opportunities.
4. Substitute consideration: Monitoring yellow pea markets and their potential as substitutes can provide leverage in negotiations with red lentil suppliers.

Conclusion

The contrasting approaches of Canada and Australia in the red lentil market highlight how production volumes, existing inventory, and preferential trade agreements can influence pricing strategies. For importers, these dynamics create opportunities for strategic sourcing decisions based on their specific market access and timing requirements.

As India's upcoming decision on yellow pea import duties approaches, market participants should prepare for potential volatility across the pulse market. Hectar's digital platform continues to monitor these developments in real-time, providing traders with the market intelligence needed to optimize procurement decisions and capitalize on emerging opportunities in this dynamic landscape of the global pulse market.