Current Sales Position:
We are 90% sold on old crop 2017/18 yellow peas and 80% sold on old crop 2017/18 green peas.
We are 20% sold for new crop 2018/19 yellow and green peas.
Over the past couple of weeks, we said that peas continue to be the shining star of the pulse sector. That it is still the case today. While lentils prices have drifted lower recently, peas prices continue to act stable.
According to the latest crop condition report (for the week ending June 18), Saskatchewan Agriculture says that many areas of the province got rain, with copious amounts recorded in west-central Saskatchewan.
At a glance, the soil moisture looks adequate, as shown on the first map. The problem is that the province is witnessing a precipitation deficit according to the second map. The bulk of the region got cumulative rainfall of less than 100 mm (represented by the dark brown colored area)
Looking forward, the Canadian Prairies are slated to experience dry weather conditions this summer. According to recent weather reports for the Prairies, Dave Phillips of Environment Canada forecasted higher than average temperatures across the west this summer. Another weather specialist, Drew Learner of World Weather, predicted normal to above-average temperatures for the Prairies.
To the south, 74% of North Dakota’s peas crop is rated G/E, up 8 points week-over-week. This is also 42 points better than the 32% reported at this time last year and just slightly behind the 4-year average of 68%.
Next door, 74% of Montana’s peas crop is rated G/E, up 2 points from the 72% reported last week. This rating is way ahead of the 20% reported at the same time last year and 23 points ahead of the 4-year average of 51%.
Going into tomorrow’s USDA Crop Progress report, the four-year average for peas crop quality in North Dakota and Montana rated G/E for tomorrow’s report (Week 25) is usually 69% and 54%, respectively.
On the global conditions front, uncertainty surrounding the size of peas production in the Black Sea region is making some headlines. A while ago, we said that Russia can no longer be ignored when it comes to the peas market.
It’s expected that Russia could take off 3.2 million tonnes in 2018/19. This would be about 650,000 tonnes below what AgCanada is currently forecasting for the 2018/19 Canadian peas harvest.
Comparably, according to APK Inform, Ukraine’s peas production in 2018/19 is estimated at 1 million tonnes. This would be down about 7% from last year’s record crop of nearly 1.1 million.
While the peas harvest in the Black Sea is a few months away from starting, Ukrainian and Russian peas production could come in together at 4.2 million tonnes.
As the chart shows, Ukrainian peas output grew exponentially, having nearly quadrupled in the past 5 years. More specifically, harvests went from 267,000 tonnes in 2013/14 to more than 1 million tonnes in 2017/18 and again in 2018/19.
On the demand side of the Ukrainian peas balance sheet, on average, Ukraine consumes 300,000 tonnes domestically. For exports, Ukrainian peas shipments in 2018/19 are pegged at 680,000 tonnes, down 14% year-over-year. However, this is almost double the 5-year average of 355,000 tonnes.
Comparably, Canada usually exports 3 million tonnes of peas per year. While Ukraine’s numbers may be small compared to Canada’s, with this sort of growth, Ukraine peas are certainly biting into Canada’s share on the world export market.
To this point, India, Pakistan, and Turkey are the top three export destinations for Ukrainian peas. It’s important to note that India and Pakistan have different import requirements on the crop quality. While India that has stringent quality requirements, Pakistan buys peas of almost any quality and processes them into flour at its own facilities. They also mix in chickpeas in the Pakistani processing industry in order to reduce the cost of finished products.
To sum up, the outlook for the peas market remains neutral-to-slightly bullish. Peas prices still have upside price potential, based on strong demand from China, soil moisture issues in Western Canada, and potential issues with the Black Sea crop. The most important factors to watch going forward will continue to be the Indian peas market (and monsoon rains), as well as the condition of the Canadian peas crop.
However, we tend to think that the upside is in the realm of 25-75 cents CAD/bushel for yellow peas, and something similar for green peas, if maybe a little higher. That being said, getting back above to $8 CAD/bushel (the number we get asked about a lot) isn’t likely for at least another 9 months, if that. Thus, we manage our risk exposure accordingly.
Have a great week!
– Brennan, Garrett, and Adrian
June 17– Peas Weekly GrainCents Digest
June 10 – Peas Weekly GrainCents Digest
June 6 – Is Indian Peas Demand Poised to Strengthen?
June 3 – Peas Weekly GrainCents Digest
May 30 – DYK? Ethiopia’s Grown 1 MMT of Peas in The Last 3 Years
May 27 – Peas Weekly GrainCents Digest
May 25 – Do You Know Where Your Peas Go Once Delivered?