PULSE MARKET UPDATE – NOVEMBER/DECEMBER 2022
The recently published data from DEFRA suggests that the pulse crop area in England had increased approximately 9% year on year. While the June survey pea area suggests a fall of 6.3%, the overall rise was driven by an uplift of approximately 13% in beans, although with a 5% confidence interval.
This caught the trade a little by surprise and has influenced the perception of supply and demand. The average crop yield was down on the 5-year average in 2022 so the impact has yet to be followed through, but could be a reason to view prices as having peaked in the short term.
The window for human consumption quality bean exports is usually before Christmas, but for several reasons it looks unlikely it will take place to the levels that have been enjoyed in more recent years. Early post-harvest low cost offers from the Baltic suppliers were quickly absorbed ,but reliant upon imports for huge quantities of commodity food stuffs Egypt has also been hit by the war in Ukraine, the Egyptian economy has tanked with inflation rising rapidly, and the value of the Egyptian Pound has fallen significantly against the US$. Import restrictions imposed by the government to try and protect foreign reserves mean that despite suitable product being available new demand has been weak to date. The longer this persists the nearer Australian production will also be to the market, making competition fiercer. The potential Australian crop is a large one and is receiving lots of rain. It remains to be seen how it will finally perform and what quality will be produced. There is some increased chance of rain spoilage, but it is highly unlikely that they will be unable to provide the quality required for this traditional market.
Looking forward the open UK autumn has encouraged winter plantings and whilst it is believed many have taken the opportunity to sow winter beans, it remains uncertain what has been drilled and what grower intentions are for the spring 2023. There is no real consensus as to what will happen but perhaps more of a belief that pea area may decline a little, with bean areas perhaps on the upside of static.
The values have become disconnected from Wheat futures and there has been some downward pressure on feed bean values with increased availability of lower priced mid-range alternative proteins such as oilseed rape meal, citrus pulp and dried distillers grains (DDGs). The declared increased crop area combined with a decline in the orders for human consumption, suggest a potential short term exportable surplus. Demand is currently very flat with buyers having predetermined their early winter requirements when prices were higher now being nervous of going long.
Domestic consumption has been hit by bird flu and a mild autumn extending the grazing season. Current feed bean values now seem reasonably stable around £265 /t ex farm depending upon location. The few active buyers are fulfilling short positions and awaiting their own sales.
Human consumption bean exports.
When the feed market was more buoyant the differential between feed and human consumption had eroded to almost zero. The market being completely flat with no interest. Now the feed value has fallen back a little there could nominally be a premium over feed beans of up to £35 /t ex farm for a really good sample but getting an offer will be the issue.
UK Combining Peas
Feed pea values are as usual at a discount (up to £20/ t ex farm) to feed beans.
The market for this type remains reasonably stable but unexciting at present. Values could vary between about £315 – £335/t ex farm depending upon quality. The best being that with good colour retention, visual appearance, size and cooking qualities. Feed peas would trade at a discount to beans at around £255/t ex farm.
Contracts are readily available for 2023 production. Green peas have the most flexibility for crop marketing, being suitable for a much wider variety of market requirements.
Short in the market and good quality open market samples could fetch over £600/t ex farm, although it is thought there are few and far between as most are grown on contract.
Contracts for crop 2023 are being taken with opportunities for up to £570/t ex farm with clauses for quality. Seed availability may be the limiting factor for later contracts. It is starting to look as though the higher prices for marrow fats are here to stay. There are few significant alternative producers of this crop and demand remains strong in this niche.
Once again in strong demand, values are currently around £335/t ex farm off contract. The open market is currently small but developing, and if over supplied off contract feed may be the destination. Currently yellow peas therefore present a potentially greater marketing risk than green peas.
Crops 2023 contracts are available for around £350/t ex farm.
Varieties Mantara and Rose are currently trading at around £305/t ex farm. The trade appears to be relying upon open market production to meet the demands of this niche market