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What’s Ahead for Pea Markets?
 
The outlook for peas (and other pulses) is still far from clear, largely because disease problems have made forecasting the Canadian crop much more difficult than usual. Even in a “normal” year, yield projections are basically a series of educated guesses and in 2016, the range of yield ideas is far wider than usual. Partly that’s because there are still some exceptionally good-looking pea crops but a few wrecks are now showing up too.
 
With those disclaimers and excuses out of the way, here are a few ideas of possible outcomes. The latest crop report from Alta Ag shows the pea crop performing fairly well. As of July 19, 80% of peas in the province were rated good or excellent, a little improvement over the previous week and about 10% above the 7-year average. That suggests above average yields are still in the cards for Alberta. In Saskatchewan, where the heavy rains have caused more problems, ratings dropped in the past two weeks, but remain above average.
 
 
Unless we get evidence of even more damage, we’re still forecasting an above-average 2016 yield, just under 40 bu/acre. That’s based on the idea that even bigger yields in Alberta would offset the losses in parts of Saskatchewan. With this yield and roughly double the normal abandonment, the 2016 pea crop would come in at 4.4 million tonnes. But we admit there are still some big unknowns that will only get sorted out once the crop is harvested.
 
If the crop somehow manages to turn out as expected, this would still allow for a sizable boost in 2016/17 exports of 3.4 million tonnes, compared to 2.65 million tonnes expected for 2015/16. Of course, the demand side of the S&D has its own set of assumptions. Chinese purchases will likely end up around 850-900,000 tonnes.
 
India is the linchpin in the export outlook. Even though peas aren’t grown there during the kharif season, the improved southwest monsoon rains is setting the stage for a much larger summer pulse crop, the first step in cooling off the overheated Indian market. Even so, record volumes of Canadian peas have already been sold to India for Q1 of 2016/17 and that should enable full-year exports to reach 1.5 million tonnes. Keep in mind there will be more competition in the Indian market too, especially from the Black Sea region and the US. So far, we’re hearing of very good yield results and decent quality from the Black Sea.
 
Yellow pea bids in western Canada have either been withdrawn or dropped to new-crop levels with the harvest approaching. Those values are moving below $8.00 per bushel, which speaks to buyers’ expectations of the size of the 2016 crop. Meanwhile, green pea bids are remaining somewhat firmer due to the reduced acreage and the possibility of lower quality. Even so, new-crop bids have weakened somewhat and are now closer to $8.50 per bushel.
 
 
 
Even though prices have softened, some volatility is possible depending on Canadian harvest outcomes. If losses from wet weather are less than expected, yellow pea bids could drop a bit further yet, at least for off-the-combine sales. Conversely, disappointing results could mean a push back toward $9.00 per bushel after the harvest rush is over. Green pea bids are expected to hold at least a $1.00 premium over yellows due to the drop in green pea acres.
 
There’s still a whole pile of assumptions and unknowns for 2016/17 but based on our production forecast of 4.4 million tonnes and exports of 3.4 million tonnes, we’re estimating ending stocks for the coming year at 340,000 tonnes. In our view, that’s neither heavy nor tight and should mean a relatively stable price outlook for 2016/17.
 

 

Source : Albertapulse

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