After hearing a long list of pulse marketing woes, including an ever-strengthening Canadian dollar, soaring ocean freight rates, rising subsidies in India and poor domestic soil moisture conditions, one grower summed it up.
“I think a lot of producers at this point in time are thinking more about crop insurance returns than they are market returns,” he told three analysts who had just shared their outlooks at a Pulse Days session.
Saskatoon commodity broker Larry Weber cringed at this, but admitted after three years of drought in some regions of the Prairies, Canadian farmers are becoming like their American counterparts.
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“Unfortunately they farm the LDP (load deficiency payment) program dollars better than we farm crop insurance,” said the president of Weber Commodities Ltd.
Weber was part of a three-person panel that also included Greg Kostal of Sparks Companies Inc. and Murad Al-Katib, president of Saskcan Pulse Trading Inc.
Kostal started by saying he had encouraging news for growers and then proceeded to paint a grim picture of pulse markets.
His main point was that instead of experiencing highs and lows in price cycles, growers could expect an environment that “is more sedate.”
Then came the bad news. He told growers India is on a mission to increase pulse production to 15 million tonnes from a typical range of 12-14 million tonnes.
He talked about “explosive” ocean vessel freight rates and the “unprecedented” rise in the Canadian dollar, which have combined to create a strange situation where farmers are getting less than they did a year ago for a crop like peas while foreign buyers are paying more.
Kostal said the pea market will be flat unless India, Canada or Europe has a crop wreck in 2004.
Edible yellow peas will gravitate toward $4-$4.25 per bushel, with feed peas at a 50 cents-per-bu. discount and greens fetching a $1 per bu. premium.
With Pakistan’s bin-buster desi chickpea crop and forecasts for a huge five million tonne harvest out of India, desi prices are near historic lows. But he said kabulis still have a shot at better bids in the next couple of months before India and Mexico harvest their chickpeas.
No. 1 large green lentils should find long-term demand in the 17-20 cents-per-pound range, with small greens trading at a two cents-per-lb. discount. Red lentils should settle in at 15 cents per lb.
Al-Katib echoed Kostal’s prediction of a relatively flat outlook for pulses.
“The message I have on lentils is, ‘ho-hum, same old, same old,’ ” he told producers.
He expects Canadian acreage will be up four percent, and production will rise 18 percent. Production in India is supposed to be strong but its carry-in stocks are depleted.
“I don’t see India as a large net exporter or importer of lentils in the coming year,” said the analyst.
After two straight years of bumper crops, Turkish acreage should be down and the country will export fewer lentils this year. And he thinks Australia’s huge crop has been overstated.
Al-Katib said the outlook for medium and small green lentils is for softer prices, while large greens and reds will remain stable.
Switching to peas, he expects to see a dramatic increase in supply coming into the 2004 crop year.
“I think the pea price is definitely on the decline,” said Al-Katib. “If there’s a market window, I think it’s the next few months.”
The chickpea price outlook can be described as “what you see is what you get.”
Al-Katib didn’t factor dry conditions into his pulse outlook because a wise old farmer from his home town of Davidson, Sask., once told him you never grow or lose a crop in January.
Weber disagreed with that sentiment.
“With all due respect to Murad, it’s January and it’s not pretty,” he said.
“We’ve got some dangerous subsoil moisture conditions facing us.”
Weber said with each additional year farmers face substandard moisture, it gets harder to grow an average crop.
He forecast a 12 percent decline in pea acreage, a 20 percent rise in lentils and no change in chickpeas.
Using data collected from the last three years, he calculated average yields of 812 lb. per acre for lentils, 15.1 bu. for chickpeas and 22.51 bu. for peas.
At prevailing yellow pea prices of $4.40 per bu., farmers will have a tough time making $100 per acre, let alone the coveted $200 per acre that everybody shoots for, said Weber.
