What’s Happening in Pea Markets?

Now that the 2017 Canadian pea harvest is essentially complete, it’s time to look ahead to see how things could shape up for the rest of 2017/18. Compared to some other crops, there isn’t much debate about how many peas were grown in Canada. Just for kicks, we figured that would work out to about 18.5 trillion peas. The earliest StatsCan survey-based estimate, the average trade guess, provincial crop reports and StatsCan’s model-based estimate are all around 3.8-3.9 million tonnes, 22% less than last year. We also know that 2017 pea acreage shifted from greens to yellows, which means green production dropped 35-40% while the yellow pea crop is down 20% from last year.

Pea yields are down 18-20% from last year but this year’s quality is far superior. According to a recent Sask Ag crop report, over 90% was in the top two grades and Alberta peas shouldn’t be much different. That should help ease concerns of importers and keep grade discounts fairly narrow in 2017/18.

Crops elsewhere are quite variable. The USDA recently pegged the 2017 crop at 700,000 tonnes, 45% smaller than a year ago. And just like in Canada, US farmers shifted from green peas to yellow peas, causing an estimated 65% drop in the green pea crop versus 30% less for yellows. In Australia, the latest pea crop estimate is 280,000 tonnes, 33% less than last year.

These declines are partly offset by sizable increases in the Black Sea region and surrounding areas. The combined Russian and Ukrainian crop is estimated at 3.7 million tonnes, up from 3.0 million last year. What seems to be noticed less is the increased prominence of eastern European countries, including places like Romania, Moldova and Baltic countries.

All of these countries are targeting South Asia as the key export destination, and that’s having an impact on Canadian export potential in 2017/18. Total demand from India and surrounding countries is a little softer to start 2017/18, but the added competition is more of a factor behind the quieter start for Canadian exports.

It’s not possible that 2017/18 will be able to match the record export volume (3.95 million tonnes) of 2016/17; supplies are simply too low this year to allow a repeat of last year’s success. Even so, exports have started the year on a quieter note when things are normally hopping. As of shipping week six, 262,000 tonnes of peas have been exported. Not surprisingly, that’s below last year’s 571,000 tonnes but it’s also trailing the 5-year average pace of 454,000 tonnes.

There is time for exports to catch up, but the first two months of the marketing year are when the tone is set for the rest of the year. The largest factor in demand later in the marketing year will be the Indian rabi pulse crop, especially desi chickpeas and peas. But that crop hasn’t even been planted yet, with yield prospects even further in the distance.

Yellow pea bids in western Canada have turned softer in recent weeks, although some of this is simply normal seasonal behaviour. The potential concern is if Indian demand remains soft-ish and Canadian farmers want to keep selling heavily, yellow pea prices could turn lower. At the same time, green pea bids have remained steady through the harvest, and the smaller North American crop of greens should keep prices well supported through the rest of 2017/18.

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