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No pea rally expected until winter

A large Indian stockpile will reduce demand to that country but exports to China are expected to increase

VANCOUVER — Big pea inventories in Canada’s top market will keep a lid on prices until winter, says a trader.

Eric Fossay, senior merchant with Cargill Canada, said India has lots of stocks on hand and is well covered for the start of 2017-18 with new crop purchases from Canada.

“My expectation is demand will likely remain quiet until these inventories are drawn down,” he told delegates attending Pulses 2017.

“We may see demand return probably some time in December or January.”

That is when Canadian growers can expect to see higher values for their yellow peas.

Fossay estimates Canadian growers are already 30 to 40 percent sold on new crop and are in no hurry to price more.

China is another major market for Canadian peas, and demand will rise there, according to Zhang Baosheng, general manager of Cofco-Shandong Vermicelli & Beans Import/Export Co. Ltd.

China imported 467,000 tonnes of peas between January and May 2017, a 28 percent increase over the same period last year.

Baosheng anticipates a 15 to 30 percent increase over last year’s one million tonnes of imports by the time the year is over.

“We will reach an historic record. It’s a really big increase,” he said.

“The main reason is our pea protein factories are processing more because of a good market for pea protein.”

Slumping pea starch imports from Europe are another factor.

Marlene Boersch, managing partner with Mercantile Consulting Venture, expects a contraction in both global supply and demand in 2017.

She is forecasting 9.4 million tonnes of production, an 11 percent drop from 2016. However, demand will also shrink by about 240,000 tonnes, a five percent reduction.

Canada has a good yield outlook in the northern Prairies, but there is concern about the crop in the southern Prairies.

Boersch said 84 percent of the 1.1 million acres planted in the United States are in North Dakota and Montana, two states suffering through severe drought.

Crops look good in Russia and most of the former Soviet Union but it is dry in parts of the European Union and Ukraine.

Canada shouldn’t expect much export competition from Australia this year, said Rob Brealey, pulse trader with Nidera Australia Pty. Ltd.

Boersch is forecasting 330,000 tonnes of Australian production.

“I think the outlook is a little less than that and probably declining further as the weather develops,” said Brealey.

He believes the crop will be less than 300,000 tonnes, and there should be strong domestic feed demand for peas this year be-cause of rising wheat and meal prices in Australia.

“Australia could well have very little in the way of peas to export this year,” said Brealey.

However, Ukraine is coming on like gangbusters. Antonina Skiliarenko of the Community of Pulse Producers and Customers of Ukraine, said the country will double its production to a record one million tonnes this year.

“Maybe next year we will be number two in world pea production,” she said to applause.

Skiliarenko said the country has plenty of fertile soil that can be converted to pea production.

“We can grow more, more and more,” she said.

“We will be a very big player in the globe for peas and all pulses.”

Moderator Vijay Iyengar, chair of Agrocorp International, said Canadian growers need to understand that Black Sea peas are no longer inferior.

“Over the last couple of years the quality of the Black Sea peas has been exceptional,” he said.

And they are sold in India at a $25 per tonne discount to Canadian peas.

Fossay said there is typically very aggressive pricing out of the Black Sea region starting around this time of year, but they sell out quick.

That is another reason he expects prices to move higher in winter when the Black Sea push subsides.

Boersch is bullish about the long-term future of peas. The two million tonne increase in global production over the past five years has been more than matched by a 2.2 million tonne increase in demand.

Pea markets are incredibly diversified with food, feed, pet food and now fractionation demand.

Fractionation plants have been announced for all three prairie provinces.

She said the plants in Alberta and Manitoba alone should add about 200,000 tonnes of new demand.

However, she warned that there could be a supply shortage looming next year because of strong wheat and canola prices. She thinks Canadian pea acres will contract in 2018.

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