Strong Demand Still Matters for Peas

The high temperatures in July and the shut-off of rain have cast doubt on lofty yield expectations for western Canada. Yes, there are still some good-looking pulse crops out there, but overall conditions have taken a sharp downturn. The Alberta Ag crop reports showed a drop in pea conditions from 79% good or excellent to 65% good/exc in just one week.

And yet, even though yields are heading backwards, prices for pulses have been declining. To some degree, this weakness is predictable as it’s simply what prices tend to do at this time of year, normally bottoming out from mid-August to mid-September during harvest. The seasonal tendency for lower prices is what happens when import buyers wait on the sidelines for the next crop to arrive.

Seasonally, prices tend to recover after harvest is complete, although the response varies. For illustration purposes, we took 2021 and 2022 out of the chart as those extreme prices obscure what happened in more “normal” years, but the effect is still the same. Sharp-eyed observers will notice that the postharvest response was bigger in some years than others. And in 2017, when India shut off pea imports, there was no recovery at all.

That’s all ancient but instructive history. The question now though is what will happen in 2024. Will the seasonal pattern be repeated this year? And if so, what type of postharvest recovery can be expected?

Of course, the outcome of the 2024 Canadian crop matters. Even though yield estimates are coming down from the earlier optimism, this year’s crop will still be larger than last year as more acres were planted in 2024. Supplies for 2024/25 could be 400-500,000 tonnes larger than last year.

Aside from the crop output in Canada (and other competing exporters), the demand side of the equation could be even more important. Back in December of last year, when India returned as a yellow pea buyer, the outlook was very positive. With both India and China in the market, demand prospects were very bright.

From December 2023 to May 2024 (June data isn’t yet available), India imported a whopping 1.86 mln tonnes of yellow peas, compared to none the year before. Of that total, Canada accounted for about 45% with Russia and Türkiye providing most of the rest.

Since that bulge in trade, Canadian exports to India have been much quieter and the outlook is a bit concerning. For one thing, yellow pea prices in India are declining and there are suggestions that most of those peas imported earlier are still sitting in Indian warehouses. In fact, some Indian importers have asked their government to reimpose tariffs on peas. While that may or may not happen, low prices in India mean there isn’t a lot of interest in Canadian peas right now.

The other big pea buyer is China, and the concerns are similar. Late in 2023, when pea prices were higher, China imported very large volumes of peas from both Canada and Russia. Just like India, many of those peas have ended up in storage. Since then, Chinese import volumes have declined and Russia has held the larger market share.

For both of these countries, the main question is when they will start importing more peas again. We won’t rule out the typical surge in fall movement of Canadian peas but it’s possible the high hopes for strong demand from Canada’s two main buyers will have to be tempered. If that’s the case, it certainly won’t help prices, especially if the 2024 crop is larger than last year.

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