It’s a bad pun, but there is a bit of a case to ‘give peas a chance’ this year.
“Peas are looking better than lentils. If I had to bet on one versus the other, I would probably favour peas,” said Chuck Penner of LeftField Commodity Research. “The reason for that is we hear all the doom and gloom about India.”
India’s imposition of steep tariffs on a variety of pulses this winter has sent prices — and forecasts for pulse acreage — plunging. But while Canada’s biggest pulse importer has sizable supplies for most pulses, the exception is peas, said Penner.
“Green peas especially just skyrocketed (and) yellow peas have continued to go up since then,” he said last month. “What that means is they don’t have huge supplies of those themselves. They will have to come back to the export market again in the next couple of months.”
Brennan Turner is also surprised by the resilience of green pea prices.
“While they did dip a little bit with yellow peas, green pea prices are continuing to sit around $8.50 to almost $9, with the new crop for 2018-19 not necessarily that far behind — that’s generally the positive,” said Turner, president and CEO of FarmLead, an e-commerce platform for buying and selling grain.
“They’re seeing a little more robustness in the peas market. For yellow peas, we do tend to see some seasonality into late April and throughout May in time frames. That’s a positive in terms of when we seed because things will start to pick up a bit.”
Pea supplies “are tightening up,” added Penner.
“There are some contracts out there for $8 green peas for that first new crop — that’s not a bad price,” he said. “But that’s a market that can get flooded if too many people start growing more.”
As well, India’s tariffs still weigh heavily on the pulse market and the country isn’t likely to lift them any time soon, said Marlene Boersch, a managing partner of Mercantile Consulting.
“They’ve been increasing some of the vegetable oil and sugar tariffs so they seem quite entrenched in protectionist mode,” said Boersch. “The government has stated that it is quite intent on increasing domestic production, especially that of pulses. In order to induce farmers to do so, it is giving them all kinds of incentives.”
The effect has been dramatic.
“We’re nowhere near last year with the export volumes,” noted Turner. “Pea and lentil exports are significantly lower, more than half of what they were a year ago.”
As of the end of January, pulse exports to India were just under 260,000 tonnes — a quarter year-earlier levels, added Boersch.
“We are about 745,000 tonnes behind and I don’t see us recovering from that,” she said.
But China has been a pleasant surprise, with its pulse imports up by about 27 per cent.
Still, Prairie farmers will cut back on pulse acreage.
“You’re definitely going to see lower pea acres across Western Canada and smaller red lentil acres across Western Canada this year, but in terms of green pea acreage, we’re expecting things to be relatively flat,” said Turner. “Same with green lentil acreage. Greens are in, reds and yellows are out.”
Producers should also expect a big carry-out, and relatively high ending stocks.
Boersch said she has heard that there will be about a 15 per cent acreage reduction, but that will still leave a lot of pulses to move.
“So now the big question is: Can we recover on exports?” she said. “We have an uphill battle into India unless the consumers there get disenchanted with paying artificially high prices — which is what they’re doing because tariffs increase the domestic price — or they have a major weather problem.”
And while there’s been a lot of buzz about increased domestic processing of pulses boosting domestic demand, that will take years to fully materialize and shouldn’t factor into farmers’ grain-marketing plans for the coming year, added Turner.