Good crop prospects in India fueled by healthy moisture reserves have slowed Canada’s pea trade with that country to a trickle after a strong start.
According to a Jan. 27 crop report produced by India’s ministry of agriculture, water levels in the country’s 76 major reservoirs are 25 percent higher than the 10-year average. That bodes well for the rabi season crop, which is set to come off later this month.
Government analysts are projecting a record wheat crop of 75.5 million tonnes, up from 72 million tonnes in 2005.
No estimate has been offered for pulses but Indian growers seeded 32.45 million acres of those crops, up five percent from last year and 21 percent higher than the long-term average, so the potential is there for a bountiful harvest.
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Saskatchewan Wheat Pool commodity trader Shaun Wildman said numbers coming out of India have to be taken with a grain of salt. Instead of relying on government reports, he gauges what is happening by trade activity.
“For one reason or another there are no (pea) bids and there haven’t been bids for a while,” he said.
Whether they are anticipating a big crop or tapping into surplus inventories, Indian importers have lost interest in sourcing peas from other destinations.
“India seems to have enough for the time being,” said Wildman.
Another looming threat for the pea industry is the ever-expanding production in the United States.
According to featured speakers at the recent North Dakota Dry Pea and Lentil Association annual convention, U.S. pea and lentil acreage will rise by 50 to 100 percent in 2006, said Wildman.
“That’s a few hundred thousand tonnes extra on the balance sheet. It is significant. It is very significant,” said the SWP trader.
“If their peas are up 50 to 100 percent, they’re going to be looking for an outlet for it. That means more sales to Cuba and more feed pea sales to Spain.”
Despite these negative factors, Wildman expects Canadian pea acreage will be steady to five percent higher than last year’s crop because the net return prospects for peas are no worse than other crop alternatives.
Agriculture Canada issued a similar outlook in its Jan. 20 Bi-Weekly Bulletin, calling for a six percent increase in pea plantings to a record 3.6 million acres.
“Canadian seeded area is forecast to increase because of good deliveries in 2005-06, relatively low carry-in stocks and low fertilizer requirements,” stated the report.
Saskatchewan Agriculture special crops specialist Ray McVicar can’t argue with that logic.
“In a year when nitrogen fertilizer costs aren’t looming so high, I think we’d see a decline in pea acres. However, that overwhelming factor is probably going to see a maintaining of acres.”
The fact that Canada is on pace for record pea exports in the 2005-06 crop year also supports the case for increased seedings.
“Even though we’re giving peas away at bargain basement prices, at least they’re moving out,” said McVicar.
Spain has been a steady buyer of Canadian peas in 2005-06. As of the end of November the country had imported 375,809 tonnes of the crop, second only to India’s purchases of 490,241 tonnes.
Crippled by its worst drought in 60 years, Spain was forced to import more than its usual volume of feed grains last year and, according to the country’s environment minister, the 2006-07 crop year has also started out dry with water reservoirs at 47 percent of capacity.
Wildman said the prognosis for continued movement of peas to Spain is good, at least until the end of the current crop year.
And while India won’t likely re-enter the market until late March another important Asian customer has picked up some of the slack.
“Export sales to China have picked up quite a bit,” said Wildman.
One other factor to consider is how the corn duty will affect the entire feed complex, according to a market outlook prepared by Louis Dreyfus Canada.
“If it stays on, substitution will become prevalent and feed prices should strengthen once the users chew through the current glut of feedgrains.
However, should the decision be reversed in March, the prices of all feedgrains are likely to succumb to downward pressure,” stated the outlook.
