How are Canadian Pulse Supplies Looking?

Last week, StatsCan issued its estimates of March 31 crop stocks, based on surveys of farmers and the rest of the industry. Along with these stocks estimates, StatsCan also puts out S&Ds for each crop as of the end of March. Often, these estimates are met with a yawn but 2020/21 has been anything but boring. This year, there’s a lot more interest in seeing if there’s enough crop available to meet demand over the last few months of the marketing year.

According to StatsCan, there were 1.88 mln tonnes of peas on Canadian farms and in commercial hands as of March 31. That’s down only 2% from last year and very much in line the last couple of years. This is a bit surprising, given the rally we saw earlier for yellow peas, largely driven by shrinking supplies. Within that total of 1.88 mln tonnes though, we think yellow pea supplies are lower indeed, but larger inventories of green peas are keeping the overall amount high, which seems to fit this year’s price behaviour.

The more important question though is how these supplies line up with demand over the rest of 2020/21, which gives us a clue about short-term price direction. After purchasing at a heavy pace earlier in the year, China’s buying has slipped back close to average in the last few months. More importantly, exporters are indicating that Chinese interest has become even quieter lately. If that’s the case, the March 31 pea supplies reported by StatsCan should provide a comfortable cushion for the rest of the year, and that’s already reflected in softer bids for yellow and green peas.

For lentils, the StatsCan supply numbers are a little less comfortable. As of March 31, StatsCan reported lentil stocks of 1.44 mln tonnes. This is down 14% from last year and is the lowest since 2016/17, when Canada was exporting record volumes of lentils. While StatsCan doesn’t break these supply numbers down by type, we expect both red and green lentil supplies are lower than last year.

On top of the reduced lentil supplies, export demand is also picking up late in the season. A surge in sales of red lentils to India is happening in response to rising prices there and green lentil demand also seems to be improving. The combination of lower supplies and increasing demand is translating into stronger bids for both red and large green lentils, heading into the home stretch of 2020/21.

StatsCan has been showing large supplies of chickpeas for some time, and that has continued with March 31 stocks of 366,000 tonnes, 19% more than last year’s already heavy supplies. Those large inventories have weighed on chickpea bids for much of the year, but signs of a late-season surge in exports have given bids a lift lately.

While these supply numbers are helpful for sorting out short-term price direction in 2020/21, they’re only a small part of the outlook for 2021/22. As always, the biggest factor for next year is the weather situation in western Canada, with a whole lot of questions and concerns.

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