Pulse Market Insight-Pea

Fewer Peas Out There

This week, StatsCan released its report of grain stocks as of December 31 and it had some interesting results for the pea market. The biggest news was a sharp increase in domestic use, which is typically made up mostly of feed consumption. It also includes consumption in human food and pet food, two markets that are growing in size. This heavy feed usage caused Dec 31 stocks to fall to 1.55 million tonnes, the lowest level in five years and sets up a tight scenario for the rest of the year.

This bigger feed use isn’t really a surprise. After all, when feed pea bids are around a new record of $8.00 per bushel, we expect to see a lot more selling into the channel. The question was how much. There are always questions about the reliability of the StatsCan numbers but on the surface, the report shows big volumes were fed. The supply & disposition table accompanying the StatsCan stocks report showed that 453,000 tonnes was consumed domestically just in the Aug-Dec period. That surpasses the total of 414,000 tonnes for the entire 2011/12 year.

We think feed use could slow down in the last half of the year, so we forecast full-year domestic use estimate at 600,000 tonnes. With this adjustment, ending stocks would drop to 125,000 tonnes, the lowest since 1993/94. Of course, it looks like green pea ending stocks will be virtually nonexistent but even yellow peas will be very tight.

With so many peas moving into the feed channel, it will likely limit pea exports. We were seeing some more positive signals about yellow pea demand from India and China but now it could get more difficult to meet this demand. That should add some price support as the year moves into its second half. The last few weeks, farmer deliveries of peas have picked up as buyers are pulling more peas into the system. This is building inventories at country elevators which are then moving out fairly quickly to Vancouver terminals. This signals that sales have been made and need to be filled.

The recent pickup in pea deliveries is a clue that there could be more yellow peas out there than reported to StatsCan. The fact that 50,000 tonnes per week are being delivered in the middle of winter without a real price rally suggests there could easily be more on-farm supplies than is showing up in the official S&D. That wouldn’t necessarily be burdensome but could cap the upside.