China Trade Situation

The 100% import tariffs China placed on Canadian peas back in March already had a large impact on prices in western Canada. When that announcement came out, yellow pea bids immediately lost $1.25 per bushel and the loss for green peas was even larger at nearly $2.00 per bushel. Prices then went mostly sideways for the next few months until seasonal tendencies this summer took them even lower.

Now, the focus is on the situation in the 2025/26 market year and possibilities for exports and the impact on supplies. For the most part, I’m a fairly optimistic person but I’m having a hard time finding a silver lining for the coming year. It’s always possible that some negotiations are going on behind the scenes but on the surface, there doesn’t seem to be anything new in the pea tariff situation. On the other hand, China just announced 76% tariffs on Canadian canola after Ottawa placed additional tariffs on Chinese steel. It seems trade tensions between the two countries are rising rather than easing.

If China’s pea tariffs are going to remain in place, we need to look at the implications for the Canadian pea balance sheet. For the supply side, Canadian pea supplies could easily top 4.0 mln tonnes in 2025/26, 750-800,000 tonnes more than last year. If that’s the case, pea exports this year need to increase considerably to avoid extremely burdensome supplies. If the Chinese market is lost however, it would mean a lot fewer exports, exactly the opposite of what’s needed.

When we look specifically at yellow peas (2023/24 is the last complete year without tariffs), we see that China accounted for nearly half of Canadian exports. While some other countries will likely step in to increase purchases, none of them would be able to replace the nearly 900,000 tonnes of demand. Thus, the Chinese tariffs would seriously curtail yellow pea exports and cause a buildup in supplies.

In terms of China’s ability to find other sources to replace Canadian yellow peas, its imports from Russia have picked up in the last two years. Despite questions about Russian quality, Chinese buyers have been able to adjust and with a 4.5-4.7 million tonne Russian pea crop in 2025, supplies shouldn’t be an issue. China has also opened the door to Ukrainian peas in recent months.

The situation isn’t quite as severe for green peas, with China accounting for a quarter of Canadian exports in 2023/24. While more dispersed destinations for green peas are helpful, losing 40,000 tonnes of demand will still have a negative effect on the market.

If the trade dispute between Canada and China can’t be resolved soon, it will be a challenging (to say the least) year for marketing peas, especially yellows. India is expected to take decent amounts of peas during the busy fall shipping season and that will help but, with only one of the two big buyers taking peas during Sep-Nov, harvest selling pressure would add even more weight to prices. Looking out to the rest of the year, the prospect of very heavy 2025/26 ending stocks is daunting.

I wish I could be more positive about the outlook but unless something changes, I think a “heads up” is a lot more helpful than just pretending everything is fine. In the meantime, let’s hope that trade tensions can be ratcheted down and the situation resolved. If so, I would be happy to be wrong in my pessimistic outlook.

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