If high prices really are the cure for high prices, then the dry pea market could be doing its job.
In the wake of last summer’s Prairie drought that slashed Canadian pea production by roughly half, prices have surged and exports have levelled off – suggesting the market may have come far enough now to at least kill off some demand, Chuck Penner of LeftField Commodity Research said as part of virtual presentation on Monday at the annual meeting of the Saskatchewan Crop Organizations.
China in particular has pulled back sharply on its buying, Penner said. With Yellow pea prices on the Prairies reaching as high as C$17/bu, he said that country’s import volumes are way down from calendar year 2020, when it purchased about 3 million tonnes of Canadian supplies. Other price-sensitive countries in Asia also appear to balking at the high prices, he said.
Instead, Penner said other dry pea producers have stepped into the breach, with China apparently downgrading its phytosanitary requirements to accept lower-priced peas from the Black Sea region, including both Russia and Ukraine. In fact, as it stands today, Canadian peas are priced at a premium to essentially every other global supplier, he said.
Even more notably, the US has also been an importer of peas from Ukraine in 2021-22, Penner said, a strong indication that either Canada simply does not have enough supply available to serve that country’s needs, or that Canadian prices have risen to the point that it makes more sense financially for American importers to source overseas instead.
“That’s a bit of a warning signal,” he said. “The world doesn’t have to pay C$17/bu for Yellow peas.”
Penner admitted Canadian pea exports started off the 2021-22 marketing year with a bang, but added that since about November, the volume of shipments has turned from an upward trend to a sideways trend. It is a sign, he said, of a lack of fresh demand farther out in the marketing year. Meanwhile, Prairie new-crop bids for Yellow peas are far below the old-crop as well, currently ranging between $11 and $13/bu.
Still, Penner said he does not expect the tight supply situation for Canadian peas to be completely fixed in 2022-23. Although the lower cost of production for peas should help garner grower interest, he said such factors as disease and rotational constraints should keep any acreage increase relatively modest, perhaps around 5%. At the same time, he said he is penciling an average yield about 5% below the average, noting continued dryness across large portions of the Prairies.
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