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Pulse Market Insight #151 JUL 17 2017 | Producers | Pulse Market Insights

Impact of (Early) Canadian Crop Conditions

At the time this article was written, Canadian pulse crops are still hanging in the balance. Some are doing pretty well, but others need rain in a hurry and a few are already beyond help. The good news is that the dry weather (so far) has kept disease issues at bay, after decimating last year’s crops, especially in Saskatchewan.

The last two years have been very instructive (and humbling) for not drawing conclusions too soon. In 2015, extremely dry conditions in May and June had triggered predictions of total crop failures, but solid rains in early July revived the crop, which ended up with decent yields. The next year, 2016, crops in many areas looked amazing early but frequent heavy rains promoted disease that dropped lentil yields to 10-year lows.

With that risk in mind, we’ll take a look at how current crop conditions could play out for pulse markets. In general, the condition of Alberta’s pulse crops are better than Saskatchewan but ratings in Alberta are trending lower. Some ratings also mask considerable variability in pulse crops, with central and northern conditions generally better than in the dry south.

This means pulse crops grown further south are the ones that are most affected. Chickpeas fit this category, seeded mainly in SW Saskatchewan and SE Alberta, where conditions are the driest. It’s true that chickpeas perform better under arid conditions but crop ratings for Saskatchewan show how bad the situation is. As of July 10, only 6% of chickpeas in that province were rated good or excellent, compared to the 10-year average of 71%.

Global chickpea supplies are running on fumes right now as Indian and Mexican crops were smaller than expected. Argentine and Russian crops were positive but buyers were waiting for Canadian and US crops which are now both threatened. This development will help support prices in 2017/18.

Lentils occupy the next tier north of chickpeas. So far, diseases aren’t a large issue which should mean better quality, as long as harvest rains hold off. The bad news is that lentils are also struggling with the dryness. Crop ratings in Saskatchewan are hanging in there, at 62% good/exc, but are still 10% below the 10-year average. Alberta lentils started the year in great shape but are fading rapidly, now at 60% good/exc compared to the average of 70%.

Global supplies of red and green lentils are a little more comfortable but there’s not much wiggle room. Canada and Australia are the two main exporters of red lentils and crops in both countries are suffering. For green lentils, it’s a similar story with Canada and the US as the two main exporters.

Because peas are grown in central and northern regions, they’ll probably see the smallest weather impact among pulses. Dry weather has been keeping diseases at bay and crop ratings aren’t too bad. In Saskatchewan, 66% were rated good/exc, compared to the 10-year average of 75%. In Alberta, the pea crop condition of 70% good/exc is still above average, but just barely, and the trend is lower.

These decent crop ratings don’t mean pea supplies will be heavy. A solid Canadian crop is needed to maintain global supplies, especially since peas in the US and Australia aren’t looking great. Threats to these crops will help provide some support for both green and yellow pea prices. Global buyers will need all of Canada’s peas and any further deterioration of the Canadian crop would give prices a boost.

As is always the case, one farmer’s pain is another one’s gain and that’s the case again in 2017/18. Canadian pulse crops still have a ways to go and could stabilize or get worse, with a shrinking chance of improving. Those who manage a decent harvest should see good returns and those with reduced yields could see higher prices offset the production losses.

Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.Pulse Market Insight #151