Canada Markets

The May 3 Stocks of Principal Field Crops released by Statistics Canada indicated a tight March 31 stocks level of 872,000 metric tonnes for dry peas in Western Canada. This is the tightest March 31 inventory since 2003 when the March 31 inventory was 691,000 mt. Supplies will need to be rationed over the balance of the crop year which will continue to remain supportive for prices.

Assuming that Agriculture and Agrifood Canada's ending stocks forecast of 200,000 mt is as tight as stocks can be drawn down on the Prairies, this would imply a 672,000 disappearance over the final four months of the crop year. Note that ending stocks were lower in 2007, when they reached 167,000 mt by the end of July.

The 672,000 mt usage as forecast compares to last year's disappearance of 810,000 mt over the final four months of the crop year and an average of 1.103 mmt disappearances in the same period over the past five years, with the recent high being in 2009, when the May through July 31 disappearance totaled 1.303 mmt.

The inventory reported for this report was divided between commercial stocks, at 294,000 mt, and farm stocks, at 578,000 mt, as of March 31. This is the tightest level of farm stocks on-hand since 2002, when farm stocks reached 566,000 mt on March 31.

Tightened stocks should remain supportive for old-crop pricing. As seen on the attached chart, green peas delivered Saskatchewan plants as of May 1 was reported at $17.02, as indicated by Saskatchewan Agriculture, although reports of prices as high as $17.50/bu. FOB farm exist. Yellow peas, as noted on the chart, are as high as $9.06/bu. delivered plant, although pricing indications of $9/bu. FOB farm also exist in the marketplace.

One supporting factor for pea prices is feed demand. The Feed Pea Benchmark Bi-Weekly Report dated May 3 to May 7 indicates a benchmark price of $320.06/mt ($8.71/bu.) for Alberta, $317.50/mt ($8.64/bu.) for Central Saskatchewan and $316.49/bu ($8.61/bu.) for Manitoba. This benchmark is referred to as a reference price which provides a valuation for peas in the feed ration based on the relative feed quality and market price for a number of competing feed ingredients, such as barley, wheat, corn, DDG's and canola meal and soymeal. Given a lack of feed quality peas on the prairies, the ratcheting higher of feed prices from $4.95/bu. at harvest to the current $6.97/bu. as reported by Saskatchewan Agriculture is undoubtedly creating an escalating floor-price on the Prairies while pushing higher the price of human consumption yellow peas. Current yellow pea bids are only barely above the highest Feed Pea benchmark price for the Prairies, indicating the impact that the feed market has had on the higher qualities.

Another supportive factor for old-crop pricing of yellow peas is stronger bids in the U.S. The USDA's Bean Market News released May 7 is suggesting grower bids in North Dakota at $10 to $11/bu. It takes but minutes to find a North Dakota bid online suggesting an $11/bu. bid. Over time, one would expect this market firmness to spill over into the Prairies, or southern Prairies stocks to flow south. One additional comment in this report focuses on the North Dakota green pea market, where it suggests "green peas (pricing) were not established ... as the price spread is beginning to narrow between new crop and current crop pricing." With current pricing for new crop greens roughly $5/bu. below the spot bid, this may be a signal that the old-crop rally for greens is about to stall.

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

(AG)

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