Roger Vickers, Chief Executive of PGRO, comments that in recent weeks bean prices have firmed even further as sellers seek to cover commitments. In a world in which grain legumes have fluctuated wildly in recent months, the one common theme has been the shortage of faba beans.
The European harvest was badly affected by the drought of last summer and the Australian crop has also been a little disappointing. Domestic demand in Australia has been good and competition for exports has been strong throughout the Middle East and North Africa.
The continuing trade spat between the USA and China has not seen a long term resolution to the movement of soya, and the Chinese continue to take up significant quantities of peas for protein from Canada, product that Indian market has effectively closed its doors to. Whether or not after the Indian elections the policy towards imports will change is not known - but it is felt likely that there will be little or no discernible change until 2020 at the earliest, if at all.
There is good interest in the UK for spring sowings of peas, and despite the significant bean seed supply issues, there remains strong interest in bean sowing. This is aided in part by the torrid time that many oilseed rape growers are having in the absence of Neonicotinoid insecticides. This situation may aid an upturn in pulse crop production as growers seek break crops in the years ahead.
Generally, the UK winter bean crops are looking fantastic and the mild conditions have meant an early start in excellent drilling conditions for many UK pulse crop growers. In the absence of official figures, some are suggesting that the winter bean crop area may have increased and that spring bean area may fall, with peas relatively stable (see note at end).
UK Pulse markets
Lewis Cottey, President of Pulse UK, reports that the market is generally very quiet, most of crop 2018 has already been traded. Parcels still trading hands have been up to £260/t ex, a rise of about £20/t in the last month. These prices are too high for the feed compounders and interest has long since shifted to the import of peas as a direct substitute at a discount of up to £35/t.
Significant export of feed beans has taken place over the winter, much of it destined for dehulling plants abroad and movement into fish food markets. Other feed exports are believed to have made their way into human consumption after significant cleaning and upgrading abroad, made possible by the huge value apparent in that market.
Offers for new crop beans are now being made at around £185-194/t ex (location dependant) at harvest and approximately £2/t higher for November. These prices remain strong and currently have more than doubled the traditional premium over wheat futures to around £55/t. At these levels animal feed compounders are likely to seek alternative proteins for their winter programmes and are showing little interest.
This year has seen a significant rise in exports to the EU and there are buyers taking positions on new crop despite the uncertainty of the future BREXIT trading position. This is thought in part to be because the UK are currently the only sellers. But perhaps also because, even if WTO terms are imposed, the tariff on beans is just 3.6% and 0% on peas. For wheat the equivalent is Euro 95/t, a serious disincentive.
Human Consumption beans
For the very best quality beans, the human consumption export market now offers a huge premium over feed of up to £100/t which is up to £350/t ex, a very firm market in the face of a lack of supply from both northern and southern hemispheres. These levels are likely to remain until the new crop is imminent.
Allowances continue to be made for up to 25% bruchid damage, allowing for costs incurred for the upgrading of whole beans to 8-10% defects before shipping.
Following the disappointments of 2018 harvest, there appear to be few growers willing to sell the crop ahead at this stage, preferring to see how well it establishes with a clearer estimate of yield before offering. The market is offering encouragement, with new crop values suggested at £25-35/t over feed bean values (up to £230/t ex).
The historic crop disincentives for pea growers live long in the mind, and despite the well-reported increases in contract values for quality peas, the increase in interest may only be enough to arrest the area decline in 2019.
Committed growers will be pleased with the upturn in contract values and growers who are prepared to put in the effort to produce a good quality crop will put themselves in a position to potentially reap the rewards in 2019.
There remain few good quality peas of any type in the market and production contracts for all types are available for 2019 crop.
Values are relatively unchanged. For good quality peas around £325/t - £340/t ex can be expected, whereas bleached samples will fetch less than £300/t ex.
New crop is thought to be mostly on contracts which vary with minimum and maximum ranges and base prices with bonuses and deductions clearly outlined. An opportunity of £350/t ex or more is generally realistic.
Large blue peas
Values are as high as £325/t ex for top quality samples with a discount of at least £25/t for bleaching of over 10%.
New crop blue peas are contracting at around £280/t ex with a range of approximately £250- £300/t ex depending on quality parameters.
These still remain of little domestic interest with uncertain values. The market is uncertain of availability and pea imports for feed have a more predictable and stable supply chain. The regular local market for UK yellows is small. Contracts for crop 2019 are available on terms between £222 - £275/t ex.
Maple peas and Tic beans
They represent a very niche market alternative. There has been no reported farm trade for some time. The traditional market for Maple peas and Tic beans is the pigeon trade. It is a small market and is believed to be declining. With nothing in the market place, the values are high with contracts available at up to £350/t for maple peas. Tic beans have a premium over feeds beans of perhaps £30/t.
The next Pulse Market Update will be March/April 2019
Note: Defra Statistics suggests 2018 crop area may have fallen almost 21%, more than previously estimated. Be aware that peas include vining peas and fresh edible beans in this data set: