While the special crops trade has a bullish outlook for edible peas, the same can’t be said for the crop’s poor cousin.
“The feed market likely has little room to improve,” said Les Aubin, feed pea merchant with Walker Seeds Ltd.
Part of the reason for his pessimism is that soybean prices are being pressured by a larger than expected U.S. crop.
Hog barns can buy soymeal with 45 percent protein content for $225 per tonne in Saskatoon, versus 21 percent protein feed peas at $125 per tonne.
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“Peas are starting to be removed from rations,” said Aubin.
The problem is compounded by the growing spread between feed and edible peas. For the past few years that spread has been about 25 cents per bushel but lately it has risen to $1 per bu.
Local hog barns that had bought feed peas directly from producers will have difficulty convincing growers to forgo the extra income they can get by delivering to an elevator for export into human consumption markets.
The outlook isn’t much rosier for feed pea exports. Canada shipped 837,100 tonnes of the crop to Spain last year but the country has recovered from drought and purchases are expected to fall dramatically.
“That adds another 500,000 tonnes of production that needs to be exported as edible,” said Aubin.
It all adds up to a dismal feed pea outlook.
“There’s not going to be a lot of feed movement and feed prices likely aren’t going to improve much from where they are at today,” he said.
Companies buying peas for domestic consumption are paying around $2.75 per bu., while crop destined for export is fetching around $3 per bu.
Louis Dreyfus Canada backed up Aubin’s outlook in its Sept. 6 market commentary.
No price hike
The company said while the spot market is already up 10-20 cents per bu. for yellow peas due to strong food demand from India and severe crop losses in Australia, there is no price hike in sight for feed markets.
“Feed pea bids are lagging due to heavy supplies of canola meal, a situation that is unlikely to change throughout 2006-07. Also, due to the fact U.S. origin pea deliveries into southern prairie points often are bought as feed, the lower end of the complex is going to be under more pressure than normal this year, leading to wider discounts,” said the grain company.
Canada is expected to have about 3.2 million tonnes of pea supply this year, about half of which typically goes for human consumption.
That leaves 1.6 million tonnes for domestic use and feed exports.
Aubin estimates 250,000 tonnes of peas are usually saved for next year’s plantings, 500,000 tonnes go into domestic feed markets and 750,000 tonnes are shipped for export. But two of those three categories are going to fall short of expectations.
“I feel the domestic demand for feed peas is going to be quite a bit less this year,” said Aubin.
When combined with Spain’s anticipated cut in purchases, there is going to be a lot of feed peas in bins.
