Canada
May 30, 2014

Source: Syngenta Canada

A much bigger-than-normal price premium is threatening to push more Canadian pea acres into Greens and the market potentially out of balance.

Green peas typically command a premium of $1 to $2/bu above Yellows, with anything in the $2 to $3 range swinging more acres to Greens. With spot bids for old-crop Green peas currently topping out at $13 and Yellows at $7, that $6 spread means “it’s pretty clear that there will be a significant shift (in acres)," said Chuck Penner of Leftfield Commodity Research in Winnipeg.

That sets up the possibility of an oversupply problem, given the market for Green peas is relatively static compared to that of Yellow peas.

“If you just drop the price on Yellows a little bit, you can encourage a lot more demand," Penner said.

In the case of Green peas, Penner said there are actually more customers for Canadian supplies but the demand simply isn’t as elastic.

The 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 Yellows.

Last month’s Statistics Canada planting intentions report pegged 2014 total dry pea intentions for Canada at 3.97 million acres, up from 3.28 million in 2013. However, the report did not break down intended acres by the Yellow and Green types.

“The big unknown (in peas) is what will be happening with Green pea acres," Penner said.

Source : DePutter Publishing Ltd.

Website: http://www.syngenta.ca

Published: June 1, 2014