The pea outlook is mundane now that the rain has returned to Spain.
“We’ve certainly seen the highs in the market as far as I’m concerned,” said Dave Walker, general manager of Walker Seeds Ltd.
He expects the top importer of Canadian peas to resume regular buying patterns in 2006-07 after a year in which it single-handedly rescued growers from a burdensome supply of the crop.
Prompted by the worst drought in its recorded history, Spain is on pace to import a record volume of Canadian peas in 2005-06.
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By the end of the current marketing year, analysts figure the country will have purchased 800,000 tonnes of the legume, which is well above its traditional import levels of 400,000 to 500,000 tonnes.
As one of the world’s largest hog producers, Spain was forced to import feed supplies when its own crops withered and died in the field.
Canadian pea exports to Spain totalled $127 million for calendar year 2005, up 53 percent from the $83 million exported in 2004.
But with improved growing conditions Spain will likely revert to normal purchases for the coming crop year, said Walker.
The country is forecast to rebound from its devastating drought, according to a report produced by the United States Department of Agriculture.
“Spain, Portugal and southern France received above-average precipitation this season, greatly enhancing their yield potential above last year’s drought-reduced season,” said the report released in May.
Spanish farmers are expected to produce 6.1 million tonnes of wheat and 8.5 million tonnes of barley, up from 3.5 million and 4.4 million tonnes respectively in 2005-06.
If Spain indeed reverts to its normal buying patterns, that means Canadian traders will have to find a new home for 300,000 to 400,000 tonnes of peas, because by most accounts the Canadian crop is going to be as plentiful as last year.
“It definitely is going to weigh on prices,” said Walker, who feels that way despite being one of the few analysts projecting a 10 to 20 percent decline in Canadian pea acreage.
“It means we’re probably going to see feed pea prices in the $3 range again.”
Another threat for Canadian pea growers is the ever-expanding U.S. crop.
The first official USDA acreage numbers will not be released until July 12, but in a Feb. 23 preliminary outlook, the agency forecast peas will surpass one million acres in 2006, up from 808,000 in 2005.
For a while it looked like U.S. exporters would be handicapped when trying to market that crop to key buyers like Spain this year, but that is no longer the case.
The European Union had threatened to slap a 14 percent duty on U.S. peas and chickpeas starting May 14 as part of a broader package of retaliatory tariffs in response to World Trade Organization-incompatible tax breaks given to U.S. companies.
But the proposed tariffs, which threatened an estimated 100,000 tonnes or $25 million US worth of pulse trade with Europe, were withdrawn at the last minute when the U.S. Congress repealed the tax breaks.
Walker is disappointed that constraint has been removed because Canadian exporters will now face stiff competition from the Americans in overseas markets.
What makes matters worse is that about 75 percent of the U.S. acreage will be yellow peas and 25 percent green, which is the reverse of traditional planting patterns.
He attributes that to the fact that both classes are treated equally under the U.S. farm program and since yellow peas are more marketable, growers have made the switch, a move that will put further pressure on yellow pea prices.
