TORONTO — Chuck Penner is not concerned that Canadian farmers will likely produce a lot more peas than last year.
The analyst from LeftField Commodity Research is forecasting 4.8 million tonnes of production compared to 3.2 million tonnes in 2015-16.
The anticipated increase is the result of more seeded acres and better crop conditions.
Statistics Canada estimates growers planted 4.3 million acres of peas, up from 3.7 million acres the previous year.
The acreage increase is entirely yellow peas, which are up 22 percent, while green pea plantings fell eight percent.
Penner tracks growing conditions, and this year is looking outstanding.
“Conditions are currently well above 2013, which you will recall was the year where we had record yields,” he told the annual Pulse and Special Crops Convention July 8.
Penner expects four million tonnes of yellow pea production and 800,000 tonnes of green peas. However, total production could be more than five million tonnes if yields turn out to be like 2013.
He expects a strong export program of 3.4 million tonnes in 2016-17. India will likely buy 400,000 to 500,000 tonnes more than it did in 2015-16, which is at the low end of trade expectations.
Sunny Chen, commodity trader with Agrocorp International, said China should buy 850,000 tonnes of peas, but it will reduce its green pea purchases.
China imported 100,000 tonnes of green peas last crop year. This year it will be more like 30,000 to 50,000 tonnes.
“I was just in China last week and took a look at some port warehouses, and it’s green peas stacked to the ceilings,” he said.
Penner believes the strong demand will put Canadian pea ending stocks for 2016-17 at a manageable 480,000 tonnes, including 350,000 tonnes of yellow peas.
“It’s more heavily weighted to yellows than greens. Greens will be tight,” he said.
The sheer volume of yellow peas will weigh down prices, despite strong demand.
“We could see harvest values closer to $8 (per bushel),” said Penner.
Green peas will likely sell for around $9 per bushel by comparison and then firm up more later in the season. The green pea price premium could reach $1.50 to $2 per bu. over yellow peas.
Penner is forecasting a good year for chickpeas, which have been in over-supply for a while.
“Farmers have been holding chickpeas on their farms for two to three years and have been kind of discouraged with producing chickpeas,” he said.
Disappointing chickpea crops in Mexico and India will rectify that situation in 2016-17.
Mexican production has declined for four consecutive years. Penner expects 90,000 tonnes of exports from that country in 2016, which is well below normal.
The world has been out of chickpeas since April and there is considerable pent-up demand. He believes India will buy 500,000 to 600,000 tonnes more than last year.
“People say I’m probably way too low on that,” he said.
“If the rabi crop is disappointing again, then for sure these numbers are too low.”
The production shortfalls in India and Mexico have led to a surge in chickpea exports from Canada in 2016.
“We’ve been struggling and struggling until this year, and then all of the sudden there’s export demand and away we go,” said Penner.
Producers are responding to the strong demand.
Australia’s chickpea acres are up 20 percent, and the crop is off to a good start, although it is starting to get too wet in some areas.
North American plantings are also higher, and growing conditions are better than they’ve been in a decade.
Penner is forecasting Canadian production of 130,000 to 150,000 tonnes.
“I would expect those (tonnes) to move to market very quickly.”
Penner believes nine to 10 millimetre kabuli chickpeas will sell for 45 to 50 cents per pound for the first half of the year.
What happens after that will depend on the Indian and Mexican harvests.