When we started 2017, pea prices were still doing pretty good, but there were some bearish challenges from healthy 2016 monsoon rains in India. This was because of the great Kharif/summer crop there and was setting up things for a record Rabi/winter pulse crop scenario.
Heading into 2017, new crop pea prices for the 2017/18 yellow pea crop sat around $6 CAD/bushel. This was well down from the double digits that we were regularly making sales for yellow peas in 2016.
Over the course of the subsequent months, we saw yellow pea prices up into the $8.00s and $9.00s with some trades on the FarmLead Marketplace even happening at $10.00 CAD/bushel.
Comparably, green pea prices continued to languish around the $8.00 CAD/bushel handles.
Some optimism for the peas market existed heading into the 2017/18, growing season, albeit not as much as 2016/17.
Thus, we had correctly forecasted at the beginning of 2017 that peas acreage in North America likely wouldn’t drop too significantly.
Lower 2017/18 Peas Acres, Production
With that in mind, 2017/18 Canadian peas acres dropped about 4% from its record from the 2016/17. This drop meant that just under 4.1 million acres got planted.
In the U.S, peas acreage got flipped over into seemingly more chickpeas and lentils production as area fell to 1.2 million tonnes.
Under some drier growing conditions which led to sub-par average yields, the USDA says that American peas production fell 45% year-over-year to just 700,000 tonnes.
Comparably Statistics Canada says that peas output in the Great White North would be 15% lower compared to the previous year at 4.11 million tonnes.
Technically speaking though, this is still 7% better than the five-year average. The main reason is acres, compared to the five-year average, is higher, whereas average yields of 37.2 bushels per acre in 2017 were just slightly below the five-year average of 38.
Despite the lower production, we continued to see stronger prospects in India for the second straight year.
Overall, through the fall of 2017, pulse prices continued to trend lower globally. Production was still relatively strong out of North America, Black Sea output was impressive, and again, the Indian outlook was promising.
The one bullish production factor was seen in the southern hemisphere. Drier conditions in Australia has felled production in the Land Down Undaa by half. Granted, last year was a bumper/record crop for most cereals, pulses, and oilseeds in Australia, 2017/18 production is still below their five-year averages.
No headline in the peas market though compared to the ones the Indian government generated.
India’s Government Policies Bomb Pulses Markets
At the end of September, India’s fumigation exemption for Canadian pulses getting exported there was not renewed. It was suggested that this could add $15 CAD/metric tonne to the cost of trade and effectively push Canadian pulses out of the market (at least for most crops).
The same exemption lost by Canada is expected to expire for US and French exporters on December 31st.
Fast forward about 6 weeks into early November and the India government decided to implement a 50% import tax on yellow peas.
Thankfully, 2.5 weeks prior on October 20th, we had correctly made the right call to make another sale on peas and lentils.
Nonetheless, as I pointed out in a Breakfast Brief on November 19th, the peas import tax affected all pulses, not just peas.
In 2016/17, India imported a near-record 3.2 million tonnes of peas. 2.02 million tonnes came from Canada, and another 127,000 were from the U.S.
In the entire marketing year of 2016/17, Canada exported nearly 3.35 million tonnes. Thus 60% of all Canadian peas exports went to India. Put another way, India received 42% of Canada’s 2016/17 production!
And the numbers don’t lie. As of data available before Christmas, Canadian peas exports were sitting at a couple truckloads above 930,000 tonnes.
That’s a drop of nearly 50% compared to the pace of Canadian peas exports at this time a year ago.
One thing to note, and as was outlined in a recent GrainCents post, yellow pea prices are bouncing back a bit as we turn the calendar over in 2018.
2018 Pea Prices, Market Expectations
With more information flying at farmers than ever, it’s difficult to get all of your insight in one place to help you make actionable decisions on your grain. That’s why FarmLead introduced GrainCents, a subscription service dedicated to telling farmers when to buy and hold their peas.
In addition, we provide regular price analysis and a deep-dive into the major (and minor) factors impacting your crop every day. In GrainCents right now, there are 5 different factors that we have identified as either bullish or bearish for pea prices.
With this insight, we help you identify windows to get the best price possible for your crop. We also identify in GrainCents what percentage you should be sold on your 2017/18 old crop peas, as well as where your sales should be on your 2018/19 peas crop.
And next week, we’re giving our GrainCents pea subscribers a special report that is worth more than an annual subscription to the service on its own.
We’re unveiling our 2018 peas forecast exclusively to our GrainCents readers.
Inside this report, we’re going to discuss the critical factors that will affect your peas crop in 2018. More important;y, we’re going to begin to set our schedule for potential selling opportunities so that we can capture the best price possible in the year ahead.