China had increased its pea purchases to fill the gap left by India’s absence, but that business is also slowing down
There is lacklustre demand for what is shaping up to be a big pea crop, says a trader.
“The demand side has been super quiet. Extremely quiet,” said Marcos Mosnaim, grain trade manager with Globeways.
India’s tariffs and quotas have severely restricted trade with that important pulse buyer.
“Product has been going there through the back door but that may stop at some point. At some point the government may realize how thing are going in,” he said.
China stepped up in India’s absence and greatly increased its pea purchases in 2018-19 but that business is slowing down as well.
Total imports in June were 112,478 tonnes, down 43 percent from the previous month, according to the General Customs Administration of China.
“We used to get, on a regular basis, calls from Chinese people. Now they are quiet. Super quiet,” said Mosnaim.
Some analysts say the slowdown is due to reduced feed pea demand due to African swine fever but he believes it has more to do with Canada’s political spat with China.
The lacklustre export market is occurring at a time when Canadian farmers are set to harvest a sizable crop.
Growers planted a record 4.33 million acres of peas this spring and the crop is in good condition heading into harvest.
“It’s looking very good,” said Cory Jacob, crops extension-specialist with Saskatchewan Agriculture.
“Comments from producers have been that their pulse crops are one of their better looking crops this year when compared to the canola or even the cereals.”
The pulses dealt with the early-season drought better than other crops. He is forecasting at least average yields.
“I’ve seen some excellent pea crops,” said Jacob.
Chuck Penner, analyst with LeftField Commodity Research, expects that the 2019 pea crop will achieve the five-year average yield of 36.9 bushels per acre, if not better.
That would result in 4.25 million tonnes of production, a 675,000 tonne improvement from the previous year, he said in a recent article for Saskatchewan Pulse Growers’ Pulse Market Report.
Total supplies are forecast at 4.53 million tonnes, a more modest 280,000 tonne increase from last year due to a 400,000 tonne drop in old-crop carryover.
Mosnaim said lots of traders have pulled their new crop pea bids because the demand isn’t there and they are worried about prices falling further. The few bids that are out there are for around $6 per bushel for yellow peas.
“How much cheaper can you go before the farmer will stop growing it?” he said.
“Maybe farmers need to build some storage.”
The green pea outlook is better due to the lack of old crop supply but there is a big supply of new crop green peas on the way and traders are scared of buying because of the looming price drop.
Tony Gaudet, owner of Belle Pulses, said there is definitely a need for green peas.
“We ran out of green peas back in May. I don’t know what happened to all of them,” he said.
Gaudet had read reports that farmers produced 480,000 tonnes of green peas in 2018-19 and the trade exported 300,000 tonnes. But that appears to be a “miscalculation.”
“There is nothing left. Where is the 180 (thousand tonnes)?”
Belle Pulses sells split peas rather than whole peas, which means the company is not reliant on sales to India and China.
“It’s actually almost a blessing that we didn’t build our business on shipping there because that’s not a good story,” he said.