There is considerable upside price potential for edible green peas, says a Vancouver commodity trader.
Crops were seeded in a timely fashion this spring but bad weather has delayed development, subjecting peas to the potential of heat stress before harvest, which would result in a lot of bleaching and more feed quality peas.
“Potentially you will see a better return for edibles if they make the grade,” said David Smythe, trader with CB Constantini Ltd.
Green peas fetched as much as a $3 per bushel premium over yellow peas in the 2008-09 crop year but that premium has eroded to around $1 per bu. for new crop.
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Traders were contracting yellows for $5 per bu. three or four months ago. Last week, there were some quotes available for $7 per bu.
“We’ve already climbed $2 per bu. on the yellow pea side of things, whereas greens haven’t really budged at all. They haven’t firmed up to the extent that the yellows have.”
Smythe said the green pea premium needs to be in that $1 to $2 per bu. range to entice growers to plant the crop because if their crop doesn’t make the edible grades the odds are it will have to be sold into feed markets, which typically trade at $1 to $2 per bu. below the edible yellow pea price.
“It’s a real risk-reward there,” he said.
Green peas have been losing ground to yellows, which are in high demand in India. According to Statistics Canada’s June preliminary estimate of crop area, 13 percent of the 3.7 million acres of peas that went into the ground this spring were green peas.
If exporters want to continue filling demand for green peas in markets in Asia and the Middle East, they will need to keep that premium attractive but Smythe figures they will be reluctant to adjust prices until they’ve had a good look at the quality of this year’s harvest.
Smythe predicts pea acres will shrink in 2010 due to continued pressure from Saskatchewan’s rapidly expanding lentil crop, which jumped to 2.3 million acres in 2009, up a staggering 44 percent from the previous year. He said a lot of lentil mills are doubling their processing capacity to handle the crop.
