WESTERN PRODUCER — Yellow peas might have one last bull run before prices tail off in May, says an analyst.
"I think there's another opportunity yet this year to do some yellow pea pricing," Chuck Penner, analyst with LeftField Commodity Research, recently told producers during the 2022 Winter Pulse Meeting hosted by Saskatchewan Pulse Growers.
The main reason for his optimism is that China appears to be back in the market after a lull in buying.
He believes China is running out of the pea stockpile it accumulated in the post-harvest period.
Prices in China have been heading higher the past few months, contrary to many other pea markets.
Penner believes the country might need another 300,000 to 400,000 tonnes of the crop until new crop supplies start to arrive.
It will all be destined for the fractionation market. China's feed pea market has evaporated due to high prices.
China is forecast to import about 1.5 million tonnes of peas in 2021-22, which is half of the previous year's levels. The loss is all on the feed side.
The other reason for Penner's price optimism is the expectation that Black Sea exports to the European Union may slump due to the war in Ukraine.
Exports were on a record pace for the first half of 2021-22. Penner estimates there is another 750,000 to 800,000 remaining to be shipped in the last half.
Those exports are in serious jeopardy because of the war, although Russia is a much bigger player in pea markets than Ukraine.
That is one of the reasons pea prices have been inching higher in Canada, he said, but warned that prices historically tend to turn down in May.
Ending stocks of yellow and green peas are each expected to be below 100,000 tonnes in Canada.
Penner is forecasting a two percent increase in pea acres in 2022 with more yellows and fewer greens.
Yields will likely be below the five-year average due to the drought hangover.
He is forecasting 3.1 million tonnes of Canadian yellow pea supplies in 2022-23, down from the pre-drought average of 3.5 to four million tonnes. Green pea supplies will be slightly below this year's levels at about 500,000 tonnes.
Penner said that is supportive of prices, not at today's levels, but better than the two or three years before that.
"That's a pretty broad range, I know. I realize that," he said.
New crop prices of $12 per bushel for yellow peas and $11 to $11.50 for greens seem reasonable based on that supply outlook, he said.
Many growers are reluctant to lock up any production after last year's fiasco, which could create a price-damping scenario at harvest time when everybody dumps peas on the market.
The big wildcard for next year is whether Canada has another devastating drought. It is still dry in many of the pea growing areas of Saskatchewan and Alberta.
The other potential market mover is whether China approves the import of Russian peas, which would be shipped by rail at a much cheaper cost than Canadian peas.
"Then even if we have lower supplies we're going to be scratching our heads a little bit and wondering where we're going to sell them to and at what price," said Penner.
Some of the peas that would have gone to China would have to be rerouted to more price-sensitive markets like Pakistan and Bangladesh.
There is a possibility that peas could work their way back into feed rations in China but not at today's new crop prices, he said.
