Crop traders who can’t find a home for the record 2004 Canadian pea crop are forecasting more of the same for 2005.
“I think we’ll see the pea acres unchanged,” Saskatchewan Wheat Pool pea merchant Shaun Wildman told growers attending Pulse Days 2005.
It seems like an illogical statement in light of depressed prices and the struggle to unload the current 3.3 million tonne crop.
But Wildman said there is nothing out there to lure growers away from the long-standing trend of substituting summerfallow acres with peas.
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With decent topsoil moisture heading into spring and few other viable cropping options to choose from, he anticipates another 3.4 million acres of peas because at current prices, yellow peas pencil in with the third best gross margin per acre, behind large lentils and flax.
“Relative to other commodities, peas aren’t looking too bad as a cropping alternative.”
Independent pulse market analyst Greg Kostal concurs that despite flat price prospects heading into 2005, good yield performance in 2004 combined with the lower nitrogen requirements of peas support a flat to higher acreage trend.
But for Ridgedale, Sask., farmer Mark Schiltroth, $3.25 per bushel doesn’t cut it. If circumstances don’t change before the end of April, he plans to cut his pea acreage by 50 percent. And he isn’t alone.
“In northeast Saskatchewan, everybody I’ve talked to is going to drop (acres). Some people are going to drop back to barely having a field or two.”
Three consecutive years of bad luck have left him frustrated with peas, one of the more expensive crops to grow.
His yields were ravaged by drought in 2002 and a hailstorm in 2003. When he finally harvested a good crop in 2004, pea markets tanked.
Schiltroth was hoping to hear some good news at Pulse Days about 2005 prospects, so he was disheartened to hear Wildman’s projection of $3.35-$4.10 per bu. for old-crop No. 2 yellow peas basis central Saskatchewan and $3.50-$4.50 per bu. for new crop.
Wildman said soaring ocean freight rates and the stronger Canadian dollar versus the Indian rupee have exacerbated the oversupply problem by forcing Canada’s biggest customer out of the marketplace.
Kostal had a similar price outlook, estimating that $3.50-$3.75 per bu. pea prices are here to stay through spring.
Considering the record U.S. corn and soybean harvests, the outlook for feed peas is equally grim. Wildman said the 3.3 million tonne pea crop pales in comparison to a 299 million tonne U.S. corn crop and 85 million tonne soybean crop.
“This is heavily influencing things and the reason why (feed pea) values right now are a little bit soft.”
He anticipates old-crop feed pea prices in the $2.50-$3 per bu. range basis central Saskatchewan, with new crop fetching $2.75-$3.25 per bu.
Growers can expect a slight premium for edible green peas with No. 2 quality old crop selling for $4.50-$5.50 per bu. and new crop going for $4.50-$6 per bu.
Wildman anticipates a huge pea carryout of about 700,000 tonnes, which will limit any chance of a price rally next fall.
The only encouraging news in his presentation was that at average yields pea production will fall 15 percent in 2005. Kostal expects three million tonnes of production, down 10 percent from 2004 levels.
After listening to the gloomy pea market outlook, Indian Head, Sask., farmer Terry Rein knew exactly what he was going to do with the large supply of yellow peas sitting in his bins.
“When I go home I’m going to dump a pile of peas at $3.50 per bu. That’s what I got out of this whole thing.”
Schiltroth also gleaned something from Wildman’s presentation.
“I guess we have come to the point where we have to forward-price our peas, by the look of it.”
