Aug 5 – Peas Weekly GrainCents Digest

The outlook for peas remains bullish. Upside potential could come from a lower Canadian new crop, a smaller Indian crop, and continued Chinese demand.

Current Sales Position:

We are 90% sold on old crop 2017/18 yellow peas.

We are 80% sold on old crop 2017/18 green peas.

We are 20% sold for new crop 2018/19 yellow AND green peas.

Good morning,

Yellow pea prices have experienced some wide trading ranges over the past two calendar years. In particular, average yellow peas prices delivered to Saskatchewan elevators have ranged from a high of $9.58 CAD per bushel in June 2017 to a low of $5.90 seen in November 2017.

More recently, yellow pea prices have edged lower from $7.30 CAD per bushel on June 21 to $6.13 CAD per bushel this week. According to some price reports, new-crop yellows range from $6 to $6.50 CAD per bushel, which is higher than the current spot price.

The green peas side of the market is holding steady at $8.18 CAD per bushel. New-crop green peas prices trade from $8 to $8.50 CAD per bushel, which is obviously also higher than the current spot price.

Yellow Peas Prices

Green Peas Prices

Yellow peas prices are following the seasonal price tendency as shown on the chart.

A few weeks ago we said that late August to October is when a low typically occurs, as harvest pressure kicks in. Prices are expected to rebound in November / December, once the harvesting season is complete.

It appears that the low has been already reached, despite increased export activity over the past few weeks, as shown on the chart. We suspect that it was mostly China that bought the 161,400 MT of peas exported by the Canadian licensed facilities in Week 51 ending July 23.

Last week, we reported that the People’s Republic bought the bulk of 104,600 MT of Canadian peas exported in June. We need to point out that based on the seasonal export pattern, shipments are expected to peak in September. With China’s buying pattern this year, it might not be a surprise if yellow peas prices rebound earlier than usual.

Weekly Canadian Peas Exports

The CGC report to week 52 (ending July 31) said that year-end 2017/18 peas exports from licensed facilities are pegged at 2.07 MT. This is down 38% or roughly 1.28 MT year-over-year and 21% or 565,700 MT lower from the 3-year average of 2.64 MMT.

Canadian Cumulative Peas Exports

India Doesn’t Like Glyphosate?

There are some reports that say that India is getting concerned about the glyphosate use on imported crops including peas.

On this front, we are welcoming Saskatchewan Pulse Growers’ initiative to advisory producers on the glyphosate use before harvest. It says that glyphosate should only be applied on peas when the seed is at less than 30% moisture content in all areas of the field that will receive herbicide applications. “In peas, this means the majority (75-80%) of pods are brown,” according to the advisory.

Weather in India

Speaking of India, the country is expected to receive below-normal monsoon rains in 2018, according to the weather agency Skymet. India’s June-to-September monsoon season is likely to see only 92% of the long-period average rainfall, down from an earlier forecast of 100%. This is somewhat accurate given that through August 2nd, cumulative monsoon rains were pegged at an average of 431.6 mm (17.3 inches) for the whole country, which is 7% behind the average. This is somewhat bullish!

Similar to last week, the Indian Meteorological Department (IMD) is optimistic that the rainfall activity is likely to be closer to normal, if not slightly above-average across the whole country during the next two weeks.

For example, the overall rainfall activity is likely to be normal to above normal over East and Northeastern states such as Uttar Pradesh who is a major peas producer as we said last week. The reality is that India’s precipitation map for the week ending August 1 hints that the country did not get the precipitation it was counting on.

India Precipitation Map

India Pulse Production vs. Monsoon Precipitation

Therefore, we could expect decreased Indian crop production, including pulses, in the Kharif season.

More specifically, we think that the final production of pulses in India will come in below the 9 MMT currently estimated by the Indian Ministry of Agriculture. Comparably, the National Collateral Management Services (NCML) is forecasting pulse crop production to fall by 8% year-over-year to 8.3 MT this Kharif season.

According to the IMD, the Indian farmers have seeded about 28.6 million acres of pulses in the Kharif crop, down almost 4% or nearly 1.2 million acres from the nearly 29.7 million acres seeded at this time last year. This is also 3% or 900,000 acres ahead of the 5-year average of 27.7 million acres.

Specific to Tur, the local peas variety, the IMD said that Indian farmers have seeded about 9.9 million acres, up from the 9.7 million acres seeded at this time last year. This is also about 5% behind the 5-year average of 10.4 million acres seeded by this time. And there are expectations that Indian planting of pulses and coarse grains is likely to be over in early August.

Western Canada Drying Out

Also impacting peas prices this week were mixed weather concerns as some parts of Western Canada are too dry, while others are too wet.

Drew Lerner of World Weather Inc. said that some areas in Saskatchewan have seen “deplorable” weather for agriculture. In particular, the areas near the U.S. border and a corridor on the western side of Saskatchewan from Saskatoon to Val Marie have been hit the hardest. Some pockets of eastern Saskatchewan are also fairly dry.

According to Saskatchewan Agriculture, most areas of the province did not receive any rain last week except for some odd patches. Many southern and central areas have not received significant moisture for well over a month (in line with Environment Canada and Drew Learner forecasts)

In contrast, Central and Northern Saskatchewan are faring better, with some northern pockets even seeing bouts of too much rain, according to the report. Bottom line, Lerner expects that crops will have to endure another month of hot, dry summer weather is expected in Western Canada before the arrival of fall in September shakes up the atmosphere.

In contrast, Central and Northern Saskatchewan are faring better, with some northern pockets even seeing bouts of too much rain. Bottom line, another month of hot, dry weather is expected in Western Canada.

According to Environment Canada’s July 31 precipitation map, much of southern Alberta and central Saskatchewan is expected to stay dry in the next three months.

In a similar vein, World Ag Weather’s cumulative precipitation charts reveal that Alberta and Saskatchewan continue to experience a moisture deficit. In the past week, Saskatchewan’s cumulative precipitation deficit widened by more than 50% or 20 mm (or 0.8 inches) to 38 mm (or short of 1.5 inches).

Manitoba has received roughly average rainfall amounts, however, in the Interlake and Southeastern corner of the province, it has been drier than normal.

Manitoba Precipitation Map

It is clear that weather in Western Canada is going to be a critical factor in the next couple of weeks as the crop finishes.

Peas Harvest 2018 Starts

This week we also got a notice from the USDA that the peas harvest in the main U.S. grower states is in full swing.

North Dakota peas harvest is just getting started and is pegged at 10%. This is way behind last year’s pace of  26% harvested and the 5-year average of 23%.

In comparison, Montana’s peas harvest is in full swing and is estimated at 19%. This is 6 points up week-over-week, but behind last year’s progress of 62% and the 5-year average of 38%.

Going into tomorrow’s USDA Crop Progress report, the five-year average for North Dakota’s Montana’s peas harvest progress is pegged at 37% and 57% respectively.

On the crop conditions front, 83% of North Dakota’s peas crop is rated G/E, which is 2 points advancement on the week. That’s ahead of both the seasonal average of 63% and last year’s G/E rating of 13%.

Next door, 66% of Montana’s peas crop is rated G/E, down 2 points from the 68% reported last week. This rating is way ahead of the 10% reported at the same time last year though and 19 points ahead of the 4-year average of 47%.

On another note, Alberta Agriculture recently released their first estimate of yields. For peas, in particular, they’re expecting an average yield of 37.3 bushels per acre. This would be 7% below the 4-year average of Alberta pea yields pegged by StatsCan at 40 bushels per acre.

Over the past 4-years, Alberta Agriculture has been doing a pretty good job of estimating Alberta’s average pea yield (in comparison with StatsCan final yield released in December). On average, it was less than 1% below StatsCan’s number.

Taking this discrepancy into account, Alberta’s new crop peas yield could come in at around 37.5 bushels per acre. We need to point out that the GrainWorld crop tour last week pegged the Canadian Prairies average peas yield at 40.1, up about 2 bushels from the 5-year average of 38.3 bushels per acre. Comparably, Agriculture Canada is currently estimating Canadian pea yield is at 37.5 bushels per acres.

What’s Next for Pea Prices

It is clear that there is a wide range of yield estimates, which is not surprising given the variable weather this year. However, we are inclined to think that GrainWorld crop tour estimate is on the high end.

We will know the answer on August 31 when StatsCan will release the first set of survey-based production estimates for crops harvested in Canada this fall.

Another important factor for peas prices is the August WASDE report, which is scheduled to be released on Friday, August 10th. Stay tuned for our analysis of the numbers, and what they mean for peas prices moving forward into 2018/19!

Overall, despite the seasonal price pressure reported on the yellow peas side of the market, the outlook for peas remains bullish.

Looking forward, we think that the peas market has more upside potential due to lower new crop supplies in Canada as weather concerns are in full swing, a smaller Kharif crop in India, and continued strong demand from China.

Have a great week!

– Brennan, Garrett, and Adrian

@GrainCents

 

 

July 29– Peas Weekly GrainCents Digest

July 22– Peas Weekly GrainCents Digest

July 15 – Peas Weekly GrainCents Digest

July 8 – Pea Prices Outlook for the Second Half of 2018

July 1 – Peas Weekly GrainCents Digest

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.