REGINA — Lost South Asian markets will hamper movement, but peas are expected to be in be demand early next year.
Yellow pea prices should be up in 2018-19, but growers are going to have to wait a while for that to happen, says an analyst.
“Probably when you reach the new calendar year, that’s when you can count on some price improvement, especially if we find our way into the feed market,” said Marlene Boersch, managing partner with Mercantile Consulting Venture.
The reason for her optimism is the expectation for a shrinking carryout.
Boersch is forecasting 3.65 million tonnes of pea production and 4.4 million tonnes of total supply, which would be higher than the current crop year.
However, she is also predicting a strong export program of 2.7 million tonnes as well as an additional 260,000 tonnes of domestic fractionation demand.
That will result in 597,000 tonnes of carryout, a 19 percent decrease from anticipated 2017-18 levels.
Unfortunately, it may take a while for the export program to kick into high gear.
Vivek Agrawal, director of JLV Agro, a commodity brokerage firm in Pune, India, said the Indian government is sitting on a stockpile of 2.7 million tonnes of chickpeas, and stocks of yellow peas are also stored at Indian ports.
That will delay demand for Canadian peas, but there still should be some sales to India next year despite government-imposed import tariffs, especially if the government is successful in its attempt to increase chickpea prices, he said.
A 990,000 tonne increase in sales to China, the United States and Canada’s milling market is helping offset a 1.3 million tonne decrease in exports to India, Bangladesh, the United Arab Emirates and Pakistan.
China is once again expected to be a big customer in 2018-19, but the sales program to that country will get off to a slow start, Sunny Chen, a trader with Agrocorp International, told delegates attending the 2018 Pulse and Special Crops Convention in Regina last week.
Southern China feed mills frontloaded 300,000 tonnes of yellow pea imports as a hedge against soybean tariff uncertainty.
He believes 250,000 tonnes is still sitting at port position. There were protein substitution problems with the peas in the feed market, so they are being rerouted into more traditional human consumption markets.
“I’m quite bearish nearby,” said Chen.
“It’s going to take some time.”
He said there is a big disconnect between what peas are selling for in China, which works out to slightly more than $6 per bushel, and what Canadian growers expect, which is more than $7.
On the bright side, North American fractionation demand has come on strong.
“A couple of months ago the sentiment was that we were going to have a million tonnes of peas to carry over. Now we’re basically half that,” said Chen.
He encouraged growers to sell into rallies caused by buying sprees from the milling-fractionation industry, which pays a premium for peas.
Boersch said another factor that will delay Canada’s export program is the emergence of Black Sea pea production.
Black Sea peas are harvested earlier than Canadian peas and tend to fly out the door because of a lack of storage capacity. She said that has led to far fewer forward sales of Canadian peas than usual.
She is forecasting 1.9 million tonnes of Russian peas and another 220,000 tonnes out of Ukraine in 2018. Both totals are quite a bit less than the previous year, but that’s still a lot of peas that will be moving early in the season.
Boersch is forecasting a 1.8 million tonne, or 18 percent, decrease in world pea production in 2018.
Neil Townsend, senior market analyst with FarmLink Marketing Solutions, believes growers planted more peas than Statistics Canada’s 3.6 million acre estimate.
However, growers are reporting more disease than usual, so he is forecasting an average yield of 35.7 bushels per acre, which is below the five-year average of 38.3 bu.
That will result in below-average ending stocks.
“That’s a little bit encouraging,” said Townsend.