PULSE MARKET UPDATE – SEPTEMBER/OCTOBER 2020
Medium to long term demand for pulses continues to present a compelling market prospect with steady growth expected.
To the surprise of almost everyone the DEFRA June survey for England figures suggested a 38% increase in cropped area for beans and a 28% increase in pea areas. The UK pulse crop area was at a long term high in 2020, with beans at over 185,000ha and peas at over 51,000ha. We have to go back to 2002 to find a larger area of pulses sown in the UK.
With the harvest 90-95% complete and UK market prices holding steady for quite some time it has been noticeable that pulse values have remained at the same level for many months while other commodities fluctuated and, in recent weeks, values have even crept a little higher.
Even though the increased crop area was at least in part driven by the appalling weather conditions of autumn 2019, there has been an underlying realisation of the importance of pulses in crop rotations for quite some time. The wheat area will obviously rebound from the incredible lows of 2020, but the question is will pulses retain or even gain ground on other crop alternatives? Demand for pulse crops is steadily expanding in a wide range of markets and the trade remains confident of finding homes for UK produce.
It is clear a variable season has produced a regionally variable crop. Sections of the country that suffered the heaviest of the winter rainfall and then the deepest of the spring drought saw the worst yields and poorest quality pulse crops. The worst has been the band up through Oxfordshire and central England. Areas from North Norfolk and Lincolnshire northwards have seen better yields and generally better quality, with the best beans again coming from north of the Humber. This variability is putting some extra uncertainty in to the trade regarding the size of the 2020 national crop. Estimates for the national bean crop tonnage have been reduced significantly and vary between 450,000 to 550,000 tonnes.
Baltic bean crops have been larger than expected and have traded early in to the human consumption export market at lower than expected values. Setting low expectations of the UK and Australian crops.
Australia is set to harvest a crop that is about 70% larger than that of 2019 as large parts of the production area in New South Wales recover from drought. Crops in northern Australian regions will come early to market this year. Shipments will start in late October, increasing the Egyptian market competition for UK bean suppliers by narrowing the window of opportunity.
The Egyptian market demand is smaller due to the carry over of crop from last year and significantly reduced consumption away from the home resulting from the Covid-19 pandemic.
The Sudanese market is exhibiting good demand, but it is small in comparison and focuses on containerised consignments. Politically and economically hazardous, this trade is a useful but reasonably specialist market.
Continuing fluctuations in the currency market and a slightly weaker sterling against the euro has encouraged feed buyers in Europe, so despite the recent rise in UK farm gate values the purchase price to the end user abroad has remained largely static.
It is notable that the Spanish had a good domestic harvest and may take less beans than last year and it appears that the Italian feed buyers may already have committed to low priced peas.
Recent firming in bean prices have largely been on the back of short sellers fulfilling their contracts for exports, rather than new demand.
Offers on farm have been relatively slow to come forward. Lower than anticipated yields have reduced storage problems for some and dampness at harvest has presented some drying issues for others. Some are preferring to store in the hope of increasing prices. Reduced availability immediately after harvest has resulted in a slight rise in values.
At current prices new domestic demand for feed beans is scarce. Too dear for inclusion in least cost rations, they are largely being excluded from ruminant and duo gastric diets with requirements only from poultry and pig feed producers and a base level interest from aquaculture.
The reduced premium over feed wheat means that the point of substitution has been eroded and recent rises in soya meal and alternative mid-level proteins such as rapeseed and sunflower meal may be bringing closer the point at which interest in beans for UK compound feed rations could increase.
Current feed bean values are just over £200- 205/t ex farm.
Despite the lack of dynamism in the market the trade is confident that the available crop will be easily absorbed.
Human consumption beans
On the plus side while the UK crop appears to have been less affected by bruchid than in recent harvests other quality issues affecting appearance have meant that so far perhaps only 15% of the samples so far seen, have been suitable for human consumption. Mostly coming from more northern producers.
With export values under pressure the premium for human consumption remains eroded to around £10/t; at around £210- £215/t ex farm. Demand is slight and some producers have opted for early shipment for feed.
The crop area is reported as up, but the yields are down. An average of 3t/ha is suggested for a typical green/blue pea with significant variation and individual crops showing huge variation in grain size. Early crops generally had lower yields, but there was excitement about the high quality. Later crops yielded more but, delayed by the rain suffered from some significant bleaching. The trade is faced with a wide variation in quality and as a result there is a wide variation in the open market values for peas.
A few open market samples are currently being offered, but off contract demand is currently low. Good quality samples might receive offers in the range of £265-£285/t ex farm, with buyers supporting their contract producers in the first instance.
2021 crop contracts are available with some merchants. Contract terms vary depending upon merchant but may be up to £330/t ex farm including quality bonuses.
Yields have disappointed many growers. Much of the lost tonnage seemingly being a result of small grain size. The usual issues with post-harvest cooking qualities are being experienced. Issues that tend to decrease with a period in store.
Prices may have risen slightly since the last bulletin, an indicative value for a bleached (>10%) lot off contract might be £227/t ex farm, stretching up to £260/t ex farm for the best good quality colour and soaking samples.
2021 crop contracts are typically available within a range £225-£275/t ex farm, for crop 2021.
Reasonable uptake was being reported at these levels prior to harvest. Post-harvest growers appear to have had autumn drilling firmly in their sights.
Current values are in the region of £205- 210/t ex farm, but there is little immediate demand for open market samples.
2021 contracts are available in the range £200-250/t ex farm, with clauses for waste and stain.
Some really impressive samples have been seen and there is a trade view that yellow peas have a significant role to play in the future of UK pulse production.
Open market samples at £300/t ex farm may find takers but generally there are few buyers for this small market.
Contracts for 2021 crop have largely been secured with the variety Rose heading targeting the Asian snack market and Mantara the domestic racing pigeon trade.
Maple peas have a small niche market and tend to be quickly covered by committed growers. If interested ask your trader if contracts are available.
Winter bean drilling:
Ideally wait until the second half of October. Planting earlier increases risk. Ploughing seed down or drilling deeper mean the drilling date can be brought forward. Drilling is preferable. Planting depth should be 2 ½ to 3 inches deep.
By the time the seed breaks the surface they should have a good root anchorage and be less prone to attack from birds.
Planting Spring beans in the Autumn?