Pulse Market Insight #150 JUL 3 2017 | Producers | Pulse Market Insights
Ripples from US Pulse Crops
Normally, we talk about how Canadian pulse crops influence markets in other countries. But as pulse acreage and production expands in many different places, the opposite is also becoming true. That’s why we sometimes highlight the goings-on in other pulse producing regions.
In the past few weeks, issues have been brewing for US pulse crops. Acreage there has been expanding sharply, especially for lentils and chickpeas, but drought is taking a toll on these crops. The heaviest concentration of pulse production is in northeast Montana and northwest North Dakota and that’s also the epicenter of drought conditions in 2017.
In this region, lentils (mostly medium greens) and peas are the dominant pulse crops, with most chickpeas grown a little further west and dry beans produced across a wider geography in the US. The USDA weekly crop progress reports are showing a clear picture of just how serious the drought impact has been so far.
In North Dakota, only 35% of the pea crop was rated good or excellent at the end of June, far below the 10-year average of 78%. In Montana, 28% was rated good or excellent. Conditions could still improve if rains were to move in but with 50-70% of the crop already in bloom, any recovery would be limited. And weather forecasts for the next week or two aren’t hopeful, with little rain and high temperatures.
Unless something dramatic happens, this situation will clearly result in below average pea yields, likely far below the 5-year average of 31.3 bu/acre. The impact would be felt in both green and yellow pea markets as US acreage is split roughly one-third/two-thirds, but the effect could be greater on the smaller green pea market, especially with Canadian acreage also lower.
Lentil conditions aren’t reported for North Dakota but in Montana, only 30% of the crop was rated good or excellent, compared to 60% last year. Problems with the US crop will mostly affect green lentils, especially medium size, and have little impact on red lentil markets. Lower yields will be offset by the 13% increase in 2017 US lentil acreage, but only partly.
So far, posted pulse bids at US (and Canadian) elevators haven’t shown any meaningful reaction to these developments and it could take some time. Typically, overseas buyers don’t respond until the losses are tallied up and North American exporters won’t want to build inventories until shortages are a sure thing. As a result, the real effect may not be seen until after harvest, and will mostly be noticeable in green lentils and green peas.
Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.