WINNIPEG — If wheat is “King” and canola is “Cinderella” then what are peas, a group gathered over lunch at a recent farm meeting wondered.
“Survival,” answered one farmer.
That seems to be the conclusion a growing number of prairie farmers have reached.
Buoyed by strong prices for peas this spring, prairie farmers told Statistics Canada in March they plan to boost acreage another 24 percent to a new record 1.6 million acres.
Bids for old crop feed peas have climbed as high as $5.25 per bushel in recent weeks as companies scramble to fill waiting vessels in Thunder Bay. Springtime prices last year were around $3.75 per bushel.
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“The bottom line is there’s lots of demand and it is hard to buy from the farmers,” said Marlene Boersch, senior special crops trader for XCAN Grain Pool Ltd.
Supplies are not only tight, but they are tightly held by farmers who traditionally hate selling into a rising market, she said.
But business is being done. Boersch expects old crop prices to start slipping as existing sales commitments to the European market are filled. By early summer, European traders have access to domestic supplies of livestock protein.
“That window is quickly disappearing,” she said.
Al Dooley, an analyst with Alberta Agriculture, agrees: “Sales of any old crop material at these prices should be strongly considered,” he said in his market outlook.
As for new crops, analysts like John Duvenaud of Wild Oats Grain Market Advisory are suggesting farmers shy away from aggressively pricing at this time.
“The downside risk is not very big,” Duvenaud said. “You are just cutting yourself out of one of your options.”
But Boersch said with bids as high as $4.25 per bushel floating around, pricing a percentage of their new crop is a worthwhile consideration. “This is a price that covers their costs and yields them a return.”
She expects there will be as much as 1.2 million tonnes of peas to sell next year. Trade estimates put exports at about 700,000 tonnes.
But while the trade has so far been able to find sales for the ever increasing volume of feed peas produced on the prairies, “the big question is the price,” Boersch said.
Old crop feed peas have enjoyed strong prices because of the shortage of soybean meal in world protein markets. If soybean supplies rebound with another big crop of feed peas, prices could slide.
