WINNIPEG, Manitoba -- There isn't a lot of news from the pea market. Trade is steady and mostly flat. Exports continue at a pace equivalent to just fewer than 3 million metric tons per year, largely to China, India and the U.S. Although exports are moving well, domestic use is lower and the carryover is building.
Feed pea and yellow pea prices on the prairies appear to be held down by the cheap feed wheat and barley that are a result of our transportation constraints. At the same time, both are a bargain compared with soybean meal. The probable price direction for feed peas and yellows is higher. Upward price movements should roughly parallel improvements in overall grain movement.
Green prices continue to hold at $11 to $12 per bushel and there still isn't a lot of excess inventory.
Canadian farmers produced about 500,000 metric tons of greens in 2013 and, although the carry-in was minimal, stocks appear to be adequate.
It's surprising that the price of greens is holding as well as it is. There doesn't appear to be any shortage. The carryover next July should be back to a comfortable level, and with new-crop green contracts available at $8 per bushel, there will probably be a higher proportion of greens planted this spring.
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Pea movement has generally been good through the winter. Processors have been moving exports via container and that has, more or less, kept product moving smoothly from farms to users.
If you want to ship yellows, check a few buyers. Sellers should get $6 to $6.50 per bushel and might get immediate delivery at a bit of a premium, if the buyer has just made a good sale of their own. Otherwise, you might be looking at end May delivery. Prairie yellow prices are still dogged by the transportation issue.
Greens will bring between $11 and $12 per bushel. Delivery could be immediate or as late as early May.
Greens have certainly fallen heavily from year-ago levels, but prices appear to have stabilized. These prices might be vulnerable to end-users deciding they have built up enough inventory.
The outlook is for feed peas and yellows to gradually appreciate as transportation returns to normal. Greens, on the other hand, could slip.
Canola still sideways
The rail transportation backlog is slowly improving in Western Canada, thereby supporting prices in the commercial system. Enhanced export movement of canola seed and canola products are slowly causing the basis levels to improve while producer selling has also increased now that moderate temperatures have materialized. It appears that the market will continue in a sideways action in the next couple weeks, given the current environment. U.S. soybean prices are now at levels to encourage imports into the Eastern Seaboard so canola will experience little spillover buying from the soybean market.
The domestic crush pace and crop year-to-date exports continues to lag year-ago levels. Carryout stocks for the 2013 to '14 crop year will finish larger than earlier anticipated. Old-crop futures are functioning to encourage demand, which will limit the upside for the remainder of the crop year. Domestic crushers and the elevator system will be saturated with old-crop supplies until September. The canola futures spreads have been trading near full carry, telling farmers to sell into the deferred positions.
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For new crop, we expect the soybean complex to have more of an influence on the Canadian canola market. The U.S. Department of Agriculture is forecasting a 6 percent year-over-year increase in soybean acres. There is potential for new crop soybean prices to incorporate a risk premium if dryer conditions materialize.
Barley prices
Cash barley prices in Southern Alberta continue to percolate higher with Lethbridge delivered trading at $194 per metric ton. There is usually a wave of producer selling before road ban season, and the market appears to be absorbing the surge in available supplies. Feedlot inventories generally peak in late April and early May, resulting in a seasonal high for domestic demand. We no longer see lower-quality milling wheat move into domestic feed channels as rail logistics improve. This has caused feed wheat prices to move higher and alleviate pressure on the overall domestic feed grain complex. The Dec. 31 stocks report suggested the 2013 barley crop might be overstated, so the carryout could finish lower than earlier projections.
The new crop market is quiet as feedlots wait to see how the upcoming crop develops. Canadian barley acres are expected to be down 10 percent, and, with average yields, the function of the domestic market will be to ration demand away from export channels. Spillover support from corn has enhanced price prospects for new crop barley, and export barley values are firmer because of dryer conditions in parts of Europe and the Black Sea region. The risk reward favors waiting before making additional old- and new-crop sales.
Lower barley acres and higher recent jump in feed barley prices has supported the malt barley market. The malt barley market will be very sensitive to growing and harvesting conditions and there is potential for higher malt barley prices later on.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 800-567-5671 in Western Canada and North Dakota, all others 204-942-1459., or e-mail admin@canadagrain.com or visit canadagrain.com.
