Canada’s lock on pulses in China threatened

Sergey Feofilov, analyst with UkrAgroConsult, is forecasting 415,000 tonnes of Ukrainian yellow pea exports, up from 375,000 tonne last year. | File photo

Growers now supply 94 percent of the Asian country’s pulses, but Ukraine and Russia are poised to enter the market

Canada could be facing increased competition into its top pea market in 2021-22, says an analyst.

Sergey Feofilov, an analyst with UkrAgroConsult, is forecasting 415,000 tonnes of Ukrainian yellow pea exports, up from 375,000 tonne last year.

“This increase may be explained by the opening of the Chinese market for Ukrainian peas,” he said during the pea panel of the Global Pulse Confederation’s Ukraine Market Outlook Conference.

The door isn’t open yet but China is working on phytosanitary agreements with both Ukraine and Russia.

David Chen, an importer with the Nanjing Bonagro International Trading Co. in China, is eagerly awaiting the pending expansion of China’s pea supply chain.

“As a buyer in China, we have to have more choice,” he said.

He noted that Ukraine can ship peas to China by sea or by rail. Canadian shipments take three to four weeks and sometimes more than one month.

Chen expects Ukraine will be able to deliver the product in two weeks.

“We hope the day is coming soon,” he said.

China imported 2.91 million tonnes of peas in 2020, a 45 percent increase over the previous year.

Canada supplied 2.73 million tonnes, or 94 percent, of that volume. The United States and France were the other main exporters.

Chen said the big increase in imports was due to China’s corn shortage, which led to escalating prices of corn and competing feedstock ingredients such as soybean meal, sorghum and barley.

Peas became a comparatively cheap substitute ingredient in the feed market.

Import volumes in 2021-22 will depend greatly on what happens to corn prices. Demand from the human consumption market in China is expected to remain stable.

Feofilov said Ukraine’s export volumes may be up in 2021-22, but they will still be about half as much as they were in 2017-18, when Ukraine’s pea sector exploded with 1.1 million tonnes of production and 870,000 tonnes of exports.

He expects a modest four percent increase in plantings to 605,000 acres in 2021 because pea prices have recaptured a $40 to $50 per tonne premium over wheat prices.

Onur Vatan, a trader with Sintez Group, one of the country’s largest pea exporters, doesn’t think there will be any increase in acreage or production because of strong projected returns for competing crops such as wheat, corn, soybeans and barley.

He said Ukraine ships whole peas to Pakistan and Bangladesh, split peas to Sri Lanka, Malaysia, Europe and South Africa and feed peas to Europe.

The country typically exports around three-quarters of the peas that it produces.

Ahmed Muhammad, a broker with AWAM Group of Companies in Pakistan, said stock levels are very low in Pakistan.

The country has already received 125,000 tonnes of peas and has bought another 55,000 tonnes for delivery through April. That means it still needs another 40,000 to 50,000 tonnes of the product.

He doesn’t anticipate demand dropping off anytime soon because the country’s desi chickpea crop is in trouble.

Another bullish factor is that Ramadan is about to begin, which means double the normal monthly consumption of peas.

Vatan said Ukrainian shippers are experiencing the same container shortage issue as their Canadian counterparts.

“We are facing a really huge problem with empties in Ukraine,” he said.

Chen said there has been a big shift to bulk shipments, with about 70 percent of the product arriving in China on bulk vessels.

He has tried to get some new crop container offers signed, but exporters are not biting because they are worried about steadily rising container freight costs.

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