Growers aren’t going to like the pea outlook Chuck Penner is scheduled to give at Crop Production Week in Saskatoon in January unless things change.
India may have just harvested a record kharif or summer crop of pulses and the rabi or winter crop is off to a fantastic start, dimming price prospects for Canadian yellow peas.
The government’s first advance estimate for the kharif harvest is six million tonnes.
Penner, founder of LeftField Commodity Research, thinks it will climb to 6.5 million tonnes, making it the biggest kharif crop on record.
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When he adds in his estimate for the promising rabi crop that farmers are now seeding, India’s total 2010-11 pulse production would be 18 million tonnes, up from the 14.6 million tonnes produced in 2009-10.
Other analysts are forecasting 19 million tonnes.
The forecasts will provide an extra 3.4 to 4.4 million tonnes of production for a country that typically imports three million tonnes of pulses annually.
“It is certainly a threat,” Penner said.
“I would suggest people keep selling into this market because I don’t think there is much more strength and, if anything, the odds are for weakness, especially after Christmas.”
If Indian crop conditions stay good, the predicted softness in pea markets could show up some time in January.
Penner said water reservoirs are full and steady rain is providing growers with excellent germination conditions for their winter crops.
Chickpeas are often used as a substitute in India for Canadian yellow peas.
Reuters News Service reports Indian chickpea acreage is likely to rise 15 to 20 percent from the previous year, while Penner has heard it will be more like 10 to 15 percent.
That’s a lot more chickpeas, even at the bottom end of the range.
“Don’t forget, India grows 20 million acres of chickpeas every year, so 10 percent is another two million acres of chickpeas,” Penner said. “It’s a heck of a pile.”
Other analysts suggest India’s increased domestic production will be accompanied by soaring pent-up demand.
Penner said that may be true, but consumption will increase only if prices drop.
Yellow pea prices have climbed in recent months. Penner said that is a short-term response to India’s nervousness about Australia’s chickpea crop and a strong early-season Canadian pea export program.
There are five vessels in Vancouver waiting to load peas.
“The line companies are having to get pretty aggressive in filling those vessels,” he said.
Licensed Canadian grain terminals exported 907,000 tonnes of peas through week 16 of the 2010-11 crop year, up from 500,000 during the same period in 2009-10.
The strong export program will limit but not eliminate the downside potential from India’s prospects for record production.
Another bearish factor is the 2.1 million tonne European pea harvest, up from 1.4 million tonnes last year in response to an improved French subsidy program.
It adds up to a gloomy price outlook for peas if India receives normal weather conditions for the rest of the rabi season, which ends in March.
“I don’t like to be the bearer of bad news, but I think it’s valuable for farmers to be aware of when the downside might occur,” Penner said.
