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Pulse Market Insight #187 JUN 11 2021 | Producers | Pulse Market Insights

Timely Price Signals

Prices are more than just what a person is paid for their crop. They are also valuable market signals. The price level, direction of change and relationship to other prices are all useful clues about the market “tone”.

That’s especially important at this time of year, during the transition from one marketing year to the next. On top of the price signals mentioned above, the relationship between old-crop and new-crop prices is a useful indication of “sentiment”; how farmers and buyers are feeling about next year’s outlook. And of course, at this time of year, prices reflect buyers’ and sellers’ ideas about crop conditions.

Peas are a good example of the clues that come from price signals. For yellow peas, old-crop bids have been weakening ever since hitting the high in mid-March. That’s a result of the lack of fresh buying from overseas importers, particularly China. It’s not really showing up in the chart yet but that downward momentum is starting to ease, as old-crop bids are getting within 50 cents of new-crop levels.

Even though new-crop bids didn’t spike as high as the old-crop, yellow pea bids for fall delivery have remained firm. That lack of pressure on new-crop bids is a friendly market signal, suggesting there’s still underlying export demand for yellow peas this fall. It also doesn’t hurt that farmers haven’t been interested in contracting yellow peas below $9.00 per bushel, much higher expectations than the last couple of years.

For green peas, old-crop bids didn’t hit the same highs as yellows. More comfortable supplies, shortages of containers and quieter export demand all kept a lid on prices. Despite those (relatively) negative signals for old-crop, new-crop green bids are staying on par with new-crop yellows. That’s a clear signal buyers feel green pea supplies won’t be as heavy in 2021/22. That, plus farmers’ unwillingness to chase the green pea market lower.

Signals coming from lentil prices are even friendlier. Not only have old-crop red lentil bids turned higher again after pausing briefly in April; new-crop bids have been climbing at the same pace. In addition, there’s only a cent or two difference between prices for spot and post-harvest delivery. That tells us there’s just as much (or more) interest from overseas buyers, even when the 2021 harvest is complete.

Green lentil prices have also been climbing, although old-crop bids have been a little choppier. Even though new-crop large green lentil bids are still below old-crop levels, the upward momentum seems to be a little stronger yet. Again, these are friendly signals.

Just because prices are moving higher doesn’t mean they’ll keep going in that same direction forever. At some point, market conditions change and both buyers and sellers adjust their viewpoints. But as the saying goes, for now “the trend is your friend”.

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