Spain could resurface as a destination for Canadian peas in 2009-10.
Three years ago, the country bought 78 percent of Canada’s bulk pea exports. It has since been replaced by India, which is on pace to buy 77 percent of this year’s bulk exports.
However, a looming crop failure could force Spain, one of the world’s largest hog producers, back into the market for new crop peas if the price is right.
“We could see (Spain) arise as a market again, which would be very nice, especially if we do have the lower qualities,” said Chuck Penner, senior consultant with Informa Economics Canada.
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Spain bought 837,100 tonnes of Canadian bulk peas in 2005-06, 541,200 tonnes in 2004-05 and 549,100 tonnes in 2003-04, which was 55 percent of that year’s bulk pea shipments.
However, in recent years peas have been shipped to edible markets in India rather than feed markets in Spain. As of the end of March, Canada had exported slightly more than one million tonnes of bulk peas to India in the 2008-09 crop year. Nothing had been sent to Spain.
“If India is in the market, they will outbid Spain for those borderline quality peas,” Penner said.
However, he worries about Canada’s over-reliance on the Indian marketplace. When one country accounts for three-quarters of sales things can go bad in a hurry, he added.
“It is a bit of a precarious situation.”
Informa is projecting a moderate decline in Canadian pea exports to India in 2009-10, which means the record high carryout forecast for the end of this crop year will get bigger next year unless there is a dramatic decline in seeded acreage. Statistics Canada is forecasting 4.2 million acres of peas, up five percent from last year’s plantings.
Spain could provide an important pressure release valve for what is expected to be a bloated supply, especially if a portion of the 2009-10 pea crop is downgraded to feed quality.
Last week, Spain’s ministry for the environment and rural affairs forecast a winter grain harvest of 15.35 million tonnes, down 21 percent from last year. Industry estimates put the crop as low as 13.5 million tonnes.
Even when the country has a bumper crop like it did last year, it still imports about eight million tonnes of grain to feed its 26 million hogs. Canadian pea traders might expect a phone call if there is any significant shortfall in local production.
However, Canadian peas will have to be competitive with feed grain produced in other European countries.
“The good news is we’ve done that before, but that’s when edible yellows were down around $4 (per bushel),” Penner said.
It could be difficult convincing growers to sell peas into feed markets when they won’t accept a price less than $6 per bushel.
However, pea prices below $6 per bu. will be a “very likely outcome” if Canadian growers plant 4.2 million acres of the crop. As well, Canadian exporters will have to find a market willing to take a lot of poor quality peas if it rains during harvest, resulting in bleached and stained peas.
“That’s when they’ll go to their buyers that they had a couple of years ago in Spain and say, ‘look, we’ve got these quantities of feed peas, what kind of price is it going to take to price it in here?’ ” Penner said.
