This past Friday, on April 27, Statistics Canada released its farmer-survey-based results of 2018 acreage intentions of Canadian farmers. Going into the report, the market was expecting to see a number from StatsCan between 3.2 and 3.7 million acres of peas.
Instead, StatsCan surprised the entire market, saying that they expecting Canadian farmers to plant 3.87 million acres of peas in 2018/19. This is down 5% from the year before, but a much larger drop was expected by many, including us.
According to the StatsCan report, farmers in Saskatchewan will keep their peas acreage basically unchanged year-over-year, dropping just 6,400 acres out of the rotation to keep things at 2.17 million.
Next door in Alberta, 240,000 fewer acres of peas are expected to get seeded, which means this 13% drop year-over-year puts total peas acreage in the Wild Rose province at 1.56 million acres.
With the number coming in above expectations, it’s easy to view this report as bearish for peas prices. At the time of writing though, we didn’t see too many bids that looked at the bearish report and dropped their bids substantially. In fact, pea prices in Western Canada seem to be holding well, with green peas earning the best support for current values.That being said, we increased our peas sales position this two Fridays ago, which is looking timely now, given the bearish nature of this Canadian acreage report.
We’ve been saying for the past few weeks that green peas face better outlook/market prospects in 2018/19. Thus, perhaps we’re seeing a significant switch out of yellow peas acres in 2018, and instead of that part of the rotation going to another crop, it’s going to green peas instead? We’d believe it if you told us that you were doing this.
While yellow peas are moving on for green peas, CGC data updated to Week 38 (ending April 22) showed weekly farmer deliveries of 64,900 tonnes. This is down 5.4% from the previous week’s estimate of 72,100 tonnes and 33% down from two weeks’ ago estimate of 101,200 tonnes. Basically, we’re seeing some lower bids and the timing of the year is such that farmer sales are slowing down.
Further, we know that there are fewer peas acres going to be drilled by American farmers this year. As a reminder, the USDA said on March 29th that said American farmer will seed just 908,000 acres of peas in 2018/19. This would be 205,000 acres, or 20% lower than 2017/18’s 1.13 million acres of American peas. It’s also about 200,000 acres below the five-year average of 1.09 million acres.
Ultimately, this means that we’re looking at nearly 5 million acres (4.78 million to be exact) of total acres attributed to peas in 2018/19 in Canada and the US combined.
For Canadian farmers specifically though, with India basically out of the market, and the market signalling lower price points, it’s clear that this decision to plant more peas in 2018/19 is, like durum or lentils, not necessarily a broader play on the macrostructure of the market, but rather an act on the situation that we’re presently in: lack of soil moisture (or rather the concern of it).
While we’ve certainly gotten some good dumps of snow in the past few weeks, it doesn’t necessarily guarantee a replenishment of the soil moisture that was so significantly depleted last year in Western Canada and the US Northern Plains.
Moving forward, we’re going to be looking more closely at soil moisture and precipitation in Western Canada to get a better understanding where this market may pop up to on weather alone.
We are now at 90% sold on old crop 2017/18 yellow peas. For 2017/18 old crop green peas, we are now at 80% sold.
For new crop 2018/19 yellow AND green peas, we now are at 20% sold.
Have a great week!
– Brennan, Garrett, and Adrian
April 27 – StatsCan Expects 3.87 Million Acres of Peas in Canada in 2018/19
April 23 – This is How Your Peas are Going Into Pasta
April 22 – Peas Weekly GrainCents Digest
April 20 – GrainCents Crop Sales Position Update
April 18 – Who’s Running The Show for US Free Trade?
April 16 – Will India’s 2018 Monsoon Rains Spike Peas Prices Again?
April 15 – Peas Weekly GrainCents Digest
April 9 – US Soybeans Loss are Canadian Peas Win?