Pea prices will likely continue their downward slide heading into 2009-10, say analysts.
“If you see six (dollars per bushel) you should probably sell it because we’re probably drifting closer to five,” Carsten Bredin, assistant vice-president for eastern grains and peas with Richardson International Ltd., told growers attending Pulse Days 2009.
Greg Kostal, president of Kostal Ag Consulting, said demand spikes could drive prices as high as $6.50 but he agreed that $5 is a realistic number for yellow peas. He suspects green peas will fetch a $1 premium over yellows in 2009-10.
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Daniel Holman, grain merchant with North West Terminal Ltd., said the trigger point for farmers around Unity, Sask., appears to be $6 per bu., down from $7 a few months ago.
Prices are being forced down by the big Canadian crop and the slow start to the 2008-09 sales program. Bredin said exports through the end of December were down 300,000 tonnes compared to last year, while production was up 600,000 tonnes.
India overbought in 2007-08 and is sitting on a mound of up to 500,000 tonnes of peas that it still hasn’t moved into the marketplace.
The only hope of putting a dent in what is expected to be a burdensome carryout is to move the product into international feed markets.
Spain is Canada’s main outlet for feed peas, purchasing 800,000 tonnes of the product in 2005. But the world is awash with feed wheat this year and to compete, pea prices to the grower would have to drop to $4 per bu. Farmers are not likely to sell at those values.
Michelle Fleury, livestock nutrition consultant, said she knows of Canadian feed manufacturers bidding up to $5.35 for peas, which is starting to be competitive with edible prices.
Session moderator Kevin Hursh thinks feedmakers are not as competitive as they think they are. Large yellow pea prices averaged $5.75 last week.
“For a nickel or 25 cents, I’ll go elsewhere,” said Hursh.
With the huge crop, a slow start to the shipping season and no feed market to speak of, Bredin can only draw one conclusion. Ending stocks are going to rise. He anticipates 941,000 tonnes of carryout, up from 255,000 tonnes last year.
“I’m not painting a very good picture,” he told growers.
Even if prices dropped to $5 and stayed there, that would stimulate more international demand and lower the carryout, but only to about 600,000 tonnes. If the projection of an almost one million tonne carryout holds true, it will affect next year’s plantings. Bredin expects acreage to plummet by 15 to 20 percent as peas lose ground to wheat, canola and durum.
Growers would need a strong signal before spring that India is back in the market in a big way before they would change their minds.
Bredin didn’t get much argument from the other panelists on that forecast. Kostal said acreage would be a challenge in 2009-10. But five years out, he sees five million acres of peas, up from this year’s four million acre crop, due to continued growth in demand from India and China.
