Last month’s soybean meal market rally spurred a surge in domestic feed pea consumption.
American soybean growers harvested nine million fewer tonnes of crop this fall on the same acreage they seeded in 2002, due to the lowest yields in a decade.
That crop shortage combined with strong world demand pushed soybean meal futures higher, dragging pea prospects along with it.
Feed pea prices climbed to the point where buyers were offering $5 per bushel at the Western Canadian Crop Production Show in January. The usual discount between feed and human consumption peas has been eroded.
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But the upward pressure on pea prices didn’t keep pace with soymeal’s rise, making peas a more alluring ingredient in hog diets.
Nutritionist Barb Stefanyshyn-Coté says the crop typically sells for half the price of soymeal because it contains half as much protein.
As that margin widens, more feed mills and hog producers turn to peas, which offer the same amount of energy as soymeal.
“When (soymeal) goes up we start using a lot more feed peas,” said Stefanyshyn-Coté.
While there is some potential for further price increases as domestic demand continues to grow, several experts think the product is approaching its price cap.
Alberta Agriculture crops analyst Charlie Pearson expects feed peas are unlikely to fetch much higher than $5 per bu.
“It wouldn’t appear to be in the cards right now,” he said.
Two panelists at the recent Pulse Days 2004 price outlook session shared that view. They said as long as India and Europe harvest a normal crop as anticipated, farmers aren’t going to see pea prices eclipse the $5 per bu. level.
The other factor is that the South American soybean harvest has just begun. The United States Department of Agriculture forecasts Brazil will produce 60 million tonnes of the crop, up 14 percent from the 2002-03 crop year. Argentina is forecast to top last year’s 35.5 million tonne harvest by one million tonnes.
If that happens, there will be downward pressure on soymeal prices and hog producers will immediately switch back to soy, said Stefanyshyn-Coté.
Peas are still a relatively new component in North American hog rations. Some producers avoid them because of problems with supply and quality consistency.
“That’s still a thorn in our side,” said Stefanyshyn-Coté.
With a big South American soybean crop looming and a decent pea crop expected in Europe, Pearson advised farmers to consider marketing a portion of their peas into the domestic feed market while demand is still strong.
“Peas are one crop I would plan on having sold through winter,” he said, adding he would jump at anything in the $4.75-$5 per bu. range.
“If I were to hold something I probably would be more tempted to hold some of the other crops versus peas.”
Stefanyshyn-Coté also believes this is a prime time to sell.
“Everybody’s reluctant to move peas for feed because they think the price isn’t worth it, but they have to remember all your splits are at that same price and all your dockage is at that same price,” she said.
