Pulse prices have fallen in recent weeks but some analysts think they are still too high compared to other crops.
A month ago, Greg Kostal predicted yellow pea prices of $10 per bushel for 2008-09. He now wonders if Indian importers will be interested at the prevailing price of $8.50 per bu.
What changed in that short time?
For one thing, the trade now forecasts a bigger Canadian pea crop, said Kostal, a Winnipeg grain industry analyst.
There is talk of a potential 3.4 million tonne harvest, up from the 3.1 million tonnes bandied about at the Canadian Special Crops Association meeting in mid-July when he made his $10 prediction.
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Also, grain and other commodity prices have fallen in the past month, which is eventually going to put downward pressure on pulse values.
“Last year it was much more of a seller’s market,” said Kostal. “Now it has turned more into a buyer’s market.”
India, which consumes about 75 percent of Canada’s pea exports, will substitute a cheaper crop for a more expensive one in a heartbeat. Kostal said the demand rationing in that country is bigger than he originally anticipated.
Brian Clancey, analyst with the Stat Publishing newsletter, agreed.
“There is very clear evidence of price rationing,” in countries other than India, he said.
“People are buying more on a hand-to-mouth basis. They are not accumulating stocks,” said Clancey.
Prices have doubled for some food commodities over the past two years but banks haven’t doubled their credit limits, so buyers are feeling the pinch.
If wheat and corn prices don’t rebound, crops like peas and lentils will have to follow them down.
“Probably special crops right now are overdone in terms of the prices they’ve achieved,” said Clancey, adding that lentils are particularly high priced in relation to a crop like wheat.
Murad Al-Katib, president of Saskcan Pulse Depot, the largest lentil and pea splitting company in the Americas, said the jury is still out on whether pulse prices have topped out.
Canada appears to have a big pulse harvest, which combined with an appreciating U.S. dollar could contribute to lower grower prices.
But despite the bearish sentiment in the market, Al-Katib noted there have been poor pulse harvests in India, Turkey and Syria, three major production regions.
FarmLink Marketing Solutions reports India’s pulse production will fall nine to 10 percent from last year’s 15 million tonne crop because of an estimated 2.5 million acre decrease and dry conditions.
“From that perspective, it is Canada’s window over the next four months and we’re optimistic there certainly is going to be an ability to move product at good (price) levels,” said Al-Katib.
