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Chinese demand keeps pea prices buoyant

Canada supplied 96 percent of the peas that China bought in the first half of 2020-21.  | File photo

China bought 1.45 million tonnes in the first six months of the year, which is a 69 percent increase from the previous year

China’s voracious appetite for peas will keep prices well supported throughout 2020-21, say analysts.

David Chen, managing director of Ninjing Bonagro International Trading Co., thinks China could import as much as three million tonnes of peas in 2020, up from two million tonnes last year.

China bought 1.45 million tonnes in the first six months of the year, a 69 percent increase over the previous year.

Canada supplied 96 percent of that volume, he told delegates attending Pulses 2.0, a virtual conference held by the Global Pulse Confederation.

Marlene Boersch, managing partner of Mercantile Consulting Venture, said there appears to be no let-up in China’s appetite for the crop.

Canada loaded one million tonnes of peas through the West Coast in August and September, with most of that heading to China.

Quinton Stewart, senior commodity trader and merchandiser with Viterra, said Canada will easily ship 2.5 to 2.7 million tonnes of peas to China in the 2020-21 marketing year and maybe as much as three million tonnes.

Overwhelming demand for the product from China’s feed sector surprised many in the industry as peas have become price competitive with corns and soybeans.

The surprising early-season demand from China has led to delays in meeting sales commitments to other key markets like Bangladesh.

Stewart thinks Canada will eventually ship 300,000 to 400,000 tonnes to Bangladesh, with most of it moving in the November through January period.

China’s increased purchases are a blessing because India is not expected to lift its import quota this year, so sales to that country will be minimal.

However, he noted that China’s feed demand won’t happen every year at the same volumes, only when peas are competitively priced.

Chen agreed, noting that China’s feed demand will quickly evaporate if India re-enters the pea market and drives prices higher.

Another factor to take into account is that Canada could eventually be facing more competition into the Chinese market as the importer continues to work on phytosanitary agreements with Russia and Ukraine.

With the strong Chinese demand, Stewart believes Canadian yellow pea prices will migrate toward $8 per bushel as the marketing campaign unfolds.

Growers won’t be pressured to sell their peas because of strong early season sales of other crops like canola, wheat and barley.

Boersch believes Canadian farmers harvested 3.7 million tonnes of yellow peas and 830,000 tonnes of green peas. The green pea number is a 30 percent increase over last year.

She thinks 2020-21 yellow pea ending stocks will be a paltry 71,000 tonnes, while there could be 308,000 tonnes of green peas, which could erode the green pea price premium.

Stewart said he thinks green pea production is closer to 650,000 tonnes.

“Regardless, there is a bit of an oversupply on green peas versus a very tight scenario happening on yellows,” he said.

But growers don’t have to sell their green peas either. The quality of this year’s crop is “very good” with low moisture content.

“Certainly they’re able to wait this thing out,” he said.

Ahmed Muhammad, chief executive officer of Pakistan’s AWAM Group of Companies, said Canada has priced itself out of the world’s third largest pea market behind China and Bangladesh.

He estimates Pakistan will buy 250,000 tonnes of peas this year with most sales occurring during the July-through-December period before prices rise.

Most of those peas will come from the Black Sea region, as well as Turkey.

Cem Bogusuglu, head of pulses for GP Global Group, estimates Russia produced 2.2 million tonnes of peas, down from the record of more than three million tonnes in 2017.

He anticipates the country will export 600,000 tonnes.

Antonina Sklyarenko, president of public community with the Pulse Producers and Customers of Ukraine, estimates Ukraine produced 600,000 tonnes of the crop, the vast majority of which will be exported.

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