Market Outlook For November

Greg Kostal Kostal Ag Consulting

Yellow pea prices going nowhere fast It looks like the odds of pulse markets seeing surprise demand-clearing opportunities are currently shrinking. There are a couple reasons for this: - We’re approaching a new crop of Indian pea, lentil, and chickpea, which will be harvested in April - The current perception is that Canada’s pea crop size is near 4 million (M) tonnes, 3.5 M of which are yellow - We have to consider logistics and handling within Canada.

Key points - Pulse importers have had reason to be passive for months, but Canadian shipping capacity ought to be a factor influencing demand. While wheat and canola users seem to have proactively booked terminal space due to Canada’s large crop, bulk users seemingly haven’t. When faced with the choice of having to pay up last minute or do with less, I suspect the latter option will be chosen. The takeaway is that odds have lessened for higher-than-expected offshore demand.

- Canada can still move good pea tonnage and match the 2012/13 export levels of 2.65 M tonnes (for all field peas). China has been a good buyer as of late. Domestic prices for soy, corn, and wheat are strong, making the extension of starch substitution a viable choice. China should be able to buy more than 750,000 tonnes from Canada this crop year. I would be surprised if it was higher, but it would offset the risk that India doesn’t buy 1.10-1.25 M tonnes from Canada.

- The current chickpea price trend is uninspiring. This is due to a large lingering global crop from last year. The best that can be said is that a lot of the bearish chickpea supply news is being digested, with a return to lower and more stable price likely quietly accelerating demand. This means that chickpeas should be able to better respond to the next round of global yield adversity.

Since the price spread between smaller-caliber chickpeas and field peas is tight, no ‘pea as a chickpea substitute’ story exists this year. There’s no compelling story for peas working as an energy or protein substitute to a high corn or soymeal price. The best feature for yellow pea is that its absolute price is the cheapest pulse source in India. This should sustain government interest to subsidize pulse consumption through its Public Distribution System, which is generally believed to make up around 1 M tonnes from all origins.

Source : saskpulse