“For the last 2 months the UK market has been relatively uneventful with very little to report,” comments Roger Vickers, chief executive of PGRO. “Their have been few if any farm sellers of any remaining 2016 crop beans and, as a result, some imports were necessary to fulfil short sale obligations in the trade. The demand for beans in the UK domestic market has been excellent over recent months and has apparently taken up any increase in availability produced.
“UK peas are starting to harvest in the south of the country. Typically, after a very dry cool spring, the weather at the point of harvest has turned catchy. It remains to be seen how this will affect quality. Particularly that of blue and marrowfat peas — the harvest timing of which is so critical to the retention of visual quality.”
Franek Smith, president of BEPA, reports Canadian pea exporters are forecasting a rise in sales to India and Bangladesh but are also anticipating a fall in prices — though their yellow peas may still have a small premium over greens and a small reduction in yellow pea production in 2017/18.
Pea production the USA is also predicted to fall significantly, although they continue to develop their export markets.
The Egyptian economy has experienced turmoil for many months and this resulted in significant reductions in UK exports last autumn. The currency was revalued in October, devaluing from around 10 EGP/GBP to almost 25 EGP/GBP in a couple of weeks, whilst it has stabilised a little still fluctuates over 23 EGP/GBP. The economy is reported on the mend, and restrictions on foreign exchange transfers have been lifted, international reserves being substantially higher than a year ago. This should make it easier for firms to import. However, inflation is eroding purchasing power and unemployment is high. Egypt remains a tough place to do business – and not without significant risk.
There will be demand for exports of human consumption beans as soon as the new crop comes available. Especially into the smaller Sudanese market where there is reportedly little or no carry over of stocks. That said, with feed bean values having exceeded £185/t in recent weeks following the lack of availability in the UK, the expectations of the sellers and buyers vis-a-vis the same time last year might take some resolving – especially as a premium will be sought for top quality samples.
With little trade in feed beans at present, the new crop not yet in, and little immediate requirement for the feed market – it appears to be a game of wait and see. Market prices have slipped a little from the highs driven by the lack of availability of recent weeks peaking around £189/t ex. As a reminder, September feed bean prices in 2016 were significantly lower at around £142/t. It remains to be seen how competitive feed beans will need to be to compete with other protein sources post-harvest. Buyers in the feed market will be keen to secure availability throughout the season – but also anxious to ensure they keep a competitive edge – so it is likely prices will come under pressure. If trading takes place at a £20 premium to September wheat, values may reach £170/t ex farm.
The predicted large carry over of marrowfat peas did materialise and this hangs over the market. It remains to be seen what impact the falling prices had upon plantings 2017 and the best indication will come as the new crop comes to the market. Although a 40% reduction in crop area was anticipated by the trade, it may take a further 12 months for the supply and demand to become more in balance. The first few crops in south of the country have already been harvested and the early indications are of good quality and yields. Off contract crops of the very best quality may fetch £225/t ex if required over and above merchants existing commitments.
The quality of large blue peas is predominantly about the retention of good colour and visual appearance. The three market sectors for blue peas in order of decreasing value are export and grocery quality, micronising, and decortication/feed. Top quality blue peas are currently commanding circa £205/t ex, with the lower end of the market at circa £170/t ex. Early indications are that yields are significantly better than 2016 with limited reports all well over 5 tonnes per hectare.
Early harvest yields for yellow peas look promising and early trades have taken place at a new market level of £175/t ex farm. Unsurprisingly, as supply picks up prices are down on the peak of £250/t reported at the extreme short position a few weeks ago.
With higher yields and a perceived uptake in crop area, yellow pea availability looks to be improving locally. Growers would be wise to consider operating on a contract.