Last week’s Peas GrainCents Weekly Digest indicated that India was scrambling to deal with the local pulse production glut. We reported that the local government of the Indian state Madhya Pradesh – one of the largest pulse growing areas down there – decided to interrupt its price support scheme for key pulse crops such as masoor (red lentils) and channa (chickpeas).
Price wise, we pointed that Canadian peas prices were bottoming, despite a whole myriad of bearish news coming from India. Prices of some varieties such as greens were grinding higher. That is still the case today although we must point that yellows are rallying a bit too with some $7.25 CAD/bushel bids being seen in Alberta. It is also interesting that yellow peas prices in India are still on the rise. It’s a bit tough to say how long they will keep grinding higher.
This week, we took a peek at what could happen to Canadian peas if China puts tariffs on U.S. soybeans. The idea is that as soybean meal and other feed ingredients become more expensive price-wise, then feed peas may become a viable feed protein alternative. Hence, strengthening demand from feed users (either in China or elsewhere) could lift the feed peas prices higher.
However, looking at the Feed Pea Benchmark in Canada feed peas is well-priced in comparison with some other sources of protein such as soymeal. With some feedstuff prices going higher though (i.e. barley), peas become a cheaper alternative.
Bear in mind that this framework is applicable if you are a feed user not only in Canada but also in China. It is more prevalent now than ever as Chinese feed users are dealing with the loss of at least one major soymeal supply market (Argentina) and possibly a second (the US…if the 25% import tax on soybeans does take effect).
On one last note, we find that the Indian pulse situation is dragging on the world pulse markets not only on the price direction but also in other ways. With the Indian situation going on, Canadian trade is reporting that the marketing environment for pulses has changed.The price discovery process is distorted. More specifically, the process is less transparent and is replaced with the word of the mouth approach. Farmers are more cautious to sell their pulses and are taking more of a wait-and-see approach.
To sum up, we think that the outlook for peas is turning more bullish now from a neutral outlook last week. Price direction wise, we’re still looking for a stronger rally to determine if this is a trend or not.
For now, on old crop 2017/18 peas, we remain at 80% sold on yellow peas, and 60% sold on green peas.
For new crop 2018/19 peas, we remain 0% sold on both yellow and green peas.
We’re not ruling out a sale before the StatsCan acreage report on Friday, April 27th so watch our emails and the GrainCents Twitter feed.
One thing supporting a bit more bullish ideas are exports: Week 36 (ending April 8) Canadian peas exports were pegged at 26,600 tonnes up from almost nothing reported for Weeks 34 and 35.
Have a great week!
– Brennan, Garrett, and Adrian
April 9 – US Soybeans Loss are Canadian Peas Win?
April 8 – Peas Weekly GrainCents Digest
April 6 – Bigger Peas Acres in Manitoba in 2018/19?
April 5 – Will Bill C-49 Be Enough to Fix Canada’s Rail Problems?
April 1 – Peas Weekly GrainCents Digest
March 29 – Like Canada, USDA Expects Lower US Peas Acreage in 2018/19
March 26 – India Exporting Peas? Not At These Prices