High Prices Cooling Pea Demand?

If excessive costs actually are the treatment for prime costs, then the dry pea market could possibly be doing its job.

In the wake of final summer season’s Prairie drought that slashed Canadian pea manufacturing by roughly half, costs have surged and exports have levelled off – suggesting the market might have come far sufficient now to at the least kill off some demand, Chuck Penner of LeftField Commodity Research stated as a part of digital presentation on Monday on the annual assembly of the Saskatchewan Crop Organizations.

China specifically has pulled again sharply on its shopping for, Penner stated. With Yellow pea costs on the Prairies reaching as excessive as C$17/bu, he stated that nation’s import volumes are approach down from calendar 12 months 2020, when it bought about 3 million tonnes of Canadian provides. Other price-sensitive nations in Asia additionally seem to balking on the excessive costs, he stated.

Instead, Penner stated different dry pea producers have stepped into the breach, with China apparently downgrading its phytosanitary necessities to just accept lower-priced peas from the Black Sea area, together with each Russia and Ukraine. In reality, because it stands in the present day, Canadian peas are priced at a premium to basically each different international provider, he stated.

Even extra notably, the US has additionally been an importer of peas from Ukraine in 2021-22, Penner stated, a powerful indication that both Canada merely doesn’t have sufficient provide accessible to serve that nation’s wants, or that Canadian costs have risen to the purpose that it makes extra sense financially for American importers to supply abroad as an alternative.

“That’s a little bit of a warning sign,” he stated. “The world doesn’t need to pay C$17/bu for Yellow peas.”

Penner admitted Canadian pea exports began off the 2021-22 advertising and marketing 12 months with a bang, however added that since about November, the quantity of shipments has turned from an upward pattern to a sideways pattern. It is an indication, he stated, of an absence of recent demand farther out within the advertising and marketing 12 months. Meanwhile, Prairie new-crop bids for Yellow peas are far beneath the old-crop as nicely, presently ranging between $11 and $13/bu.

Still, Penner stated he doesn’t count on the tight provide state of affairs for Canadian peas to be utterly mounted in 2022-23. Although the decrease value of manufacturing for peas ought to assist garner grower curiosity, he stated such components as illness and rotational constraints ought to maintain any acreage improve comparatively modest, maybe round 5%. At the identical time, he stated he’s penciling a mean yield about 5% beneath the typical, noting continued dryness throughout giant parts of the Prairies.

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