Canada Markets

Agriculture Canada released their monthly Canada: Outlook for Principal Field Crops yesterday, taking into account the latest industry trends and most importantly, the recent Statistics Canada Dec. 31 stocks data, which was released on Feb. 5.

By far, the largest swing in the report was the update of the supply and demand tables for peas and lentils. Earlier this month, the Stats Can Dec. 31 stocks report estimated dry pea stocks at 1.552 million metric tonnes, or 8.3% below December 2011. Lentil stocks were reported at 1.9 mmt, which was 15% below the 2011 stocks. The lower-than-expected stocks level was a result of higher-than-expected feed demand, which acted to further tighten forecasts for ending pea stocks, while also reducing the burdensome lentil stocks to more manageable levels.

The Feb. 21 report increased dry pea feed consumption by 100,000 mt, while reducing ending stocks from 300,000 to 200,000 mt, resulting in a further tightened 7% stocks/use ratio. This would result in the tightest ending stocks since 2007, when ending stocks were 167,000 mt. The average carryout over the past five years was 484,000 mt.

In the same report, domestic consumption for lentils was increased by 250,000 mt, while ending stocks were slashed from 700,000 to 450,000 mt. This brought the ending stocks/use ratio to a more acceptable level of 26% from the 44% level in previous forecasts. This would represent the lowest ending stocks in three years, although still higher than the previous five-year average which is 301,800 mt.

One sure sign of the price competitiveness for peas in the feed ration is seen in the Feed Pea Benchmark Bi-Weekly Report, produced by the three prairie pulse grower organizations, the latest issue released today. In this report, the economic value of feed peas in the ration is calculated, given the relative cost of other competing commodities. This week's benchmark is calculated at $326.59/mt in Alberta, $310.42 in Saskatchewan and $332.72 in Manitoba. While this benchmark is not necessarily the price paid for peas in the feed market, it is a price level that is competitive with the No. 2 or better export market bids for yellow peas, which provides access to larger volumes of product.

While the tightening of stocks has not led to noticeable price increases, with yellow peas in the $8.50 to $9/bu. range in many areas of the Prairies and large green lentils at 20.5 cents/lb where they've been for some time, the balance of power is perhaps slowly shifting to the Canadian sellers, due to the tighter stocks which can be drawn from. Focus will remain on the development of the Indian rabi crop for potential market signals.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

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