CNS Canada — Canadian pea crops are generally in the ground, as they are usually one of the first seeded in Western Canada, but the makeup of the acreage remains to be seen and could impact prices going forward.
Canadian farmers, primarily in Saskatchewan, intended to plant 3.975 million acres of peas in 2014, up from 3.285 million the previous year, according to Statistics Canada data.
Green and yellow peas are the two field pea crops grown in Western Canada, but the early intentions report doesn’t break down pea acreage by type.
“The big unknown (in peas) is what will be happening with green pea acres,” said Chuck Penner of Leftfield Commodity Research in Winnipeg. Tight green pea supplies caused old-crop prices to rally to a large premium over yellow peas, which should have brought more interest into greens, he said.
Green peas typically command a premium of $1-$2 per bushel above green peas, with anything in the $2-$3 range swinging more acres to greens. With spot bids for old-crop green peas currently topping out at $13 per bushel and yellow peas at $7, that $6 spread means “it’s pretty clear that there will be a significant shift (in acres),” said Penner.
However, while it’s usually easy to find a market for yellow peas, demand for green peas is much more static, he said — which means it’s much easier to overwhelm the green pea market with large supplies.
“If you just drop the price on yellows a little bit, you can encourage a lot more demand,” said Penner, pointing to India as a major customer for Canada’s yellow peas. For green peas, there are actually more customers, but demand is not as elastic.
Expectations for a larger green pea crop can be seen in new-crop pricing, with the current top-end bid of $8.50/bu. at a more traditional $2 above yellow peas, according to Prairie Ag Hotwire data.
Many buyers should already be backing away from higher old-crop prices in anticipation of cheaper and more abundant new-crop supplies, especially for green peas, said Penner.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.