China is poised to overtake India as Canada’s top pea customer in the coming years, says an analyst.
Stat Publishing editor Brian Clancey recently returned from the China Pulse Import and Export Industry Conference in Taiyuan, China, where he learned about the growing de-mand for the product.
There is huge investment in fractionation plants in China, according to Boasheng Zhang of Cofco-Shandong Vermicelli and Beans Import Export Company, one of the presenters at the conference.
Processing capacity is expected to double by the end of 2014 to 320,000 tonnes and more than double again to 690,000 tonnes by the end of 2015.
Clancey said that will soon have a profound impact on Canadian pea demand.
“In 2014-15 it could add a couple hundred thousand tonnes of de-mand,” he said.
China is expected to import one million tonnes of peas in 2014.
“They think by 2016 they’re looking at 1.4 million tonnes of demand, which would put them ahead of India. The Indian traders were there and they were not happy to hear this.”
Canadian pea exports to China took off when vermicelli noodle makers discovered peas could be used as a cheap substitute for mung beans, but it is a market that may be tapped out.
“That’s flat. They don’t expect any growth there. They see that as being at best trend-line,” said Clancey.
The big potential is for fractionating peas and using the starch, protein and fibre in new food products gaining traction in China as consumers have more disposable income to spend.
“There is a huge growing demand for the fractionated products,” he said. “It’s just ending up in a ton of different food products in China.”
Clancey thinks the market outlook is bright for yellow peas given the new Chinese demand and this year’s lackluster monsoon rains in India, which could limit the winter or rabi season production of pulses.
“Yellow peas probably will be kind of flat but firm through the end of the year. We’ll probably begin to see some increases in the new year,”
However, he doesn’t anticipate a huge run-up in prices due to the stiff competition for Canadian rail service and the price sensitivity of markets like India.
“If you get the price too high right now you’ll push off demand and if you do that your market is going to collapse,” said Clancey.
His price outlook for green peas is not nearly as bullish due to overproduction of the crop in North America. Grower bids recently tumbled to about $7.50 per bushel from $9.50 a couple of weeks ago.
“That’s a big change,” he said.
China uses green peas in snack foods, which is a growing market but they are not used for flour or other fractionated products.
“Who the heck is going to pay a $300 per tonne premium for flour when it doesn’t look any different and the characteristics are no different (than yellow pea flour),” said Clancey.
The other big market factor for peas will be the quality of this year’s Canadian crop, which has been damaged by late season rain.