By Brian Clancey
Sask Pulse Growers Newsletter (Click Link Below For the full Newsletter.)
No one is more anxious about Statistics Canada’s December 5 crop estimates than field pea traders. The report normally includes a breakdown of pulse production by class. Among those numbers, the most anticipated is the estimate for green peas.Grower bids for green peas reached record highs levels in November, with major buyers paying $13.50 per bushel (bu) for No. 2-or-better peas. Since August of 1987, grower bids had only been over $10/bu for 59 weeks (as of the third week of November, 2012). More remarkable is the fact that November was the first time that prices for green peas averaged more than $13/bu.Bids for green peas have climbed steadily since March, with markets trying to tell farmers they needed to plant many more green peas than intended. StatsCan initially pegged this year’s green pea acreage at 340,000 acres, up only 10,000 acres from last year. This is the lowest acreage planted to the crop since the 1990s.
Markets believe green pea yields are below average, with the result being that production is down at least 10,000 tonnes to around 298,600 tonnes. Some people think that StatsCan will report that far fewer green peas were grown than suggested by the September crop report. Not everyone believes the picture is as dire, but no one doubts that some areas had disastrous yields.If StatsCan agrees that production is around 298,600 tonnes, that puts the available supply of green peas for the current marketing year at around 328,700 tonnes. That number is down almost 41,000 tonnes from last year and almost 220,000 tonnes below the recent five-year average available supply of green peas. With supplies down, Canada has no choice but to reduce the quantity of green peas it exports, whether as whole or split peas. If the crop is smaller, even fewer peas will be available for export.
Canada is not the only producer of green peas in the world. Production in the United States (U.S.) is up over last year. The United States Department of Agriculture (USDA) does not provide a breakdown of production by class, but it appears that the green pea production is up roughly 70,000 tonnes at around 184,000. On the other hand, Argentina is looking at a crop failure because of poor weather during the growing season.
Argentina was expecting to grow 200,000 tonnes of green peas this year, up from last year’s 110,000 and the previous annual average of 50,000 tonnes. Total production is now expected to reach approximately 170,000 tonnes, with only 50,000 meeting the standards for No. 2 quality green peas. Another 50,000 is expected to be 15% bleached or higher, while the remaining 70,000 may only be suitable for livestock feed.
Unless there is a drastic reduction in the expected size of Canada’s green pea crop, the main exporters have grown 52,000 tonnes more human-consumption-quality green peas than last year. However, that is just part of the story. The amount of green peas carried over from the previous marketing year is down 98,000 tonnes. This means the available supply of green peas is down almost 46,000 tonnes from last season at around 595,000 tonnes.
This is the second year in a row in which the world faces a fundamental shortage of green peas. During the past five marketing years, Canada, the U.S., and Argentina sold an average 814,000 tonnes of green peas each year on export and domestic markets. Given such a big difference between how many green peas were grown and how many were consumed each year, it is not surprising to see prices rise. This is the reason prices have soared to record highs.
The implications are obvious. Green pea area will rise sharply in 2013. Total land in field peas in Canada is expected to increase. It now seems likely that all of the increase will be accounted for by green peas, with area expected to jump from 340,000 to 576,000 acres. Farmers in the U.S. and Argentina may also increase production next year, suggesting there will be more than enough green peas available to world markets in 2013/14.Seed availability is expected to be the main factor limiting the expansion in green pea area in Canada next spring. This means there could be excellent opportunities to sell disease-free green peas with good germination rates as planting seed. Beyond that, it is important to take advantage of opportunities to sell product, with the goal of being sold out of green peas before next year’s harvest gets underway.
Grower bids for green peas should remain strong through at least May. If seeded area rises as expected, it will then become harder to sell product because end users will try to avoid buying anything until after next year’s harvest. Importers will expect prices to drop next summer.
Judging from the current income performance of pulses versus wheat, durum, and canola, there is a good chance pulse acreage will decline in 2013. As it stands today, field pea acreage should increase, with a big jump in green pea seeding offsetting minor declines in yellow pea and other classes. The gains in green pea area will not be enough, however, to offset the forecast drop in lentil area.
The problem facing lentils is that it is taking longer than hoped to move the surpluses that accumulated in 2010 and 2011. Pessimism has swept through the market, with some traders worrying that next summer’s carry-over could set a new record high. The net result is grower bids for lentils have weakened since the summer. For the second year in a row, lentils are generating below-normal returns per acre in comparison to wheat, durum, barley, and peas. At the same time, farmers will once again be called upon to store almost half as many lentils as they grew this year.
Source : Sask Pulse