Grain traders say Agriculture Canada was high with its latest pea carry-out estimate, especially given burgeoning demand from India.
“I think they’re smoking something pretty good over there,” said Eric Fossay, senior pea merchant at Agricore United.
In its March 27 supply and disposition report, Agriculture Canada forecast 400,000 tonnes of carry-out stocks. Fossay thinks it will be less than half that amount.
“Quite honestly we have never seen a pace of exports as brisk as what we’re seeing this current crop year,” he said.
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Shrinking supplies and a growing demand from India have contributed to a 30-40 cents per bushel increase in edible yellow pea prices over the past six weeks.
“With tightening stocks I think we’ll likely see strong prices carry into new crop,” said Fossay.
Louis Dreyfus Canada concurs there will be a bigger run on peas, noting that Agriculture Canada’s forecast of 2.2 million tonnes of exports seems low considering 1.5 million tonnes moved during the first six months of 2005-06.
“It is starting to appear as though the extremely strong pace of demand this year could pull ending stocks down to lower-than-expected levels,” stated the company in its March 27 market commentary.
Stan Skrypetz, the government analyst who drafted the Agriculture Canada report, was taken aback by the comments from two of Canada’s largest pea traders.
“I’m surprised about that because up until now I’ve been criticized for having my carry-out stocks too low.”
When he forecast 600,000 tonnes of leftover peas back in October, Skrypetz got an earful from members of the trade who suggested the number would be as high as 800,000 tonnes.
“So I’m glad they’re coming down. I’m actually very happy over that,” he said.
Skrypetz acknowledged it is conceivable exports will reach 2.3 million tonnes, which would shave another 100,000 tonnes off ending stocks.
But after reviewing Statistics Canada’s latest stocks report showing slightly more than 2.1 million tonnes of peas in the system as of the end of December, he decided to go with the more conservative 400,000 tonne estimate, a decision reinforced by the assumption that farmers will start holding on to some of their supplies if they think prices are headed higher.
Fossay thinks that number is conservative given the fast pace of exports this year. He has penciled in 150,000 tonnes of carry-out, which is “virtually nil” for the pea sector.
Strong Spanish demand for feed peas early in the year has been complemented by a surge in Indian demand for human consumption peas late in the 2005-06 marketing campaign.
Reports out of India suggest the rabi or winter crop, when most of the country’s pulses are produced, has been beset by dry growing conditions and a wet harvest.
“Strong demand coming at their harvest time would indicate they’ve had pretty serious problems with their crop,” said Fossay.
He expected the Indian demand to vacuum up much of the remaining pile of peas.
Pro Farmer Canada said if ending stocks fall to 200,000-300,000 tonnes, it could result in a further price gain of 50-75 cents per bu. for the crop.
Fossay said the late surge in pea prices may lead to more acres in 2006-07. According to Agricore United’s internal surveys, pea area could be up as much as five percent this spring, which is a little higher than Agriculture Canada’s estimate of a three percent hike.
“And these surveys were done prior to the recent (price) run-up, so maybe we’ve bought a few more acres in the last few weeks,” said Fossay.
