Pea Market Dynamics

It’s not always noticeable, but markets for the various pea classes are quite different. That’s especially the case on the demand side of the market but supply factors can also be variable. Looking back at prices over the last few years helps illustrate how, at various times, these markets move independently.

One thing is obvious; weather in western Canada affects the prices for all classes of peas the same way. The 2021 drought caused prices for all pea classes to spike while the improved yields of 2022 allowed prices to slide again. No surprise there.

Besides weather-related moves, prices for the various classes often don’t behave the same. Historically, green peas tend to hold a sizable premium over yellows. That premium hadn’t really been seen since 2019/20 but has shown up again in recent months. Yellow pea bids shot up after the 2021 drought and then built a large premium over greens in 2021/22, but that gradually faded.

In 2022/23, green pea bids have remained solid while yellow peas have steadily declined, opening up a spread of $3-4 per bushel. One reason for the relative strength of green peas is that prices were at a large discount to yellows in the lead-up to the 2022 planting season, which discouraged green pea acres last year in favour of yellows. The result is that green pea supplies are generally tighter than yellows. Maple peas are more of a niche product with inelastic demand, allowing them to outperform all other classes.

The other bigger factor behind this different price behaviour is where the export demand is coming from. So far in 2022/23, Canadian green peas have been exported to 58 different countries and while China is the largest destination, its share is less than 40% of the green pea total. No other country has more than 10% of Canadian green pea exports and that broad demand helps support prices.

Meanwhile, yellow peas have been exported to fewer (39) countries but more importantly, China is the largest destination by a wide margin. In the past two years, Chinese has taken 79% and 86% of Canadian yellow pea exports. So far in 2022/23, China’s share has dropped to 59%, with two other destinations – Bangladesh and Pakistan – accounting for another third of Canadian exports. The dominance of these three price-sensitive countries is the main reason why yellow pea prices have been weaker in 2022/23.

At this point, it looks like the 2023 Canadian pea crop could be smaller than last year, but the different market dynamics for green and yellow peas will have varying impacts on the outlook for 2023/24. Steadier and more widespread demand for green peas should provide more support for those prices, especially if 2023/24 supplies are lower. The biggest change for yellow peas is that Russian peas are now moving into China, Canada’s main destination. Even if fewer yellow peas are grown in Canada, a shift in Chinese buying could be a sizable risk for Canadian farmers.

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