Flooding in northeastern China is extending the bullish run in dry bean markets.
Stat Publishing analyst Brian Clancey recently returned from a pulse conference in China, where traders told him the bean crop could be up to 40 percent smaller than anticipated because of flooding and root rot disease.
The losses are in the same family of beans grown in Canada, such as navy, pinto, kidney and black beans.
“I think (China) may be the world’s largest exporter of that (family), so it’s fairly significant when they have a problem,” he said.
Read Also
Bond market seen as crop price threat
A grain market analyst believes the bond market is about to collapse and that could drive down commodity values.
Clancey is forecasting that China may have to reduce exports to 787,000 tonnes in 2013-14, down from an estimated 921,000 tonnes in 2012-13.
“It just adds up to less competition for available export demand, which supports prices,” he said.
Bean markets have already been bolstered by vastly reduced seeded acreage in North America and a crop disaster in Argentina.
The China situation could put more upward pressure on prices, although the market has known about it for a while.
“The asking prices for Chinese beans have been steadily creeping up. New crop prices aren’t backing off,” said Clancey.
Northeastern China has experienced the most extensive flooding since 1998, and water levels in some locations are the highest they’ve been in 100 years.
Paulette Sandene, China analyst for the U.S. Department of Agriculture’s Foreign Agricultural Service, said flood damage to corn and soybean crops has been offset by higher yields because of good moisture in non-flooded areas of the region.
That is likely not the case for beans, which are grown low to the ground and subject to water-logging, she added.
Clancey agreed, saying crops such as corn and peas would benefit from the moisture.
“They’d be yielding like crazy, but the beans aren’t.”
Clancey doubts that up to 40 percent of the crop has been lost.
“They’re traders. They’re prone to exaggeration.”
However, he believes some production has been lost, and there will be quality problems with much of what remains.
Clancey wonders how long the bull market for beans will last.
“In some parts of the world there is anecdotal evidence that already demand has shifted out of beans into lentils in particular,” he said.
The next bean market adjustment will likely happen later this year or early next year once Brazil harvests its crop and seeding plans are known in Argentina.
