Roger Vickers, Chief Executive of PGRO, comments that old crop bean values are holding up remarkably with new crop potential looking bright so far.
There is really little to say about the trading of old crop pulses. Values have hardly changed since the last report - perhaps on the back of short seller nervousness, and the exceptional prices paid for feed beans, as export markets relaxed human consumption grade requirements in the face of limited availability.
Most growing crops look good. Having been drilled into excellent seedbeds, rain has generally fallen in time and the potential looks excellent. Pest and disease reports are currently low, and if moisture does not become a limiting factor, we may perhaps realise better than long-term average yields.
With much focus on the environment, the impact of agriculture and increasing input restrictions – and with apparent grower disillusionment with oilseed rape and the continued demand for vegetable protein security - it seems that pulses may be focal crops of the future.
We must, though, be careful to observe whether this perceived thinking is reflected in future planting. Early estimates suggest that pulse crops could easily increase by 10-20% in 2020, recovering some of the ground recently lost.
The crop area in the Baltic is not confirmed and was sown late, hence it may be down slightly on 2018. Earlier drought concerns have been recently eased by rainfall and some forward sales have been made to Egypt.
Australia remains compromised by drought as they start to plant, but the crop area is forecast to rise by 10% year on year, with a wide yield spread estimate of 250-400,000 tonnes.
China’s battle with African swine fever and escalating US trade restrictions is reducing their soya demand, leading to significant downward price movement.
UK Pulse markets ...
Lewis Cottey, President of Pulse UK, reports that last year must be viewed as an exception, but continues to exert influence, as there is virtually no old crop available. Some smaller local requirements are being fulfilled at around £245/t ex. Feed peas have been imported as substitutes in the extruded protein market, delivered at a discount of up to £40/t to the ex farm feed bean values.
The main feed compounders supplying the ruminant and pig markets have largely moved away from beans and are substituting other protein sources, whilst early stock turnout has also reduced demand.
With few buyers or sellers, the focus is on the new crop. Early new crop prices remain around £190-£200/t ex farm. At these levels there has been seller interest and some forward exports to aquaculture and EU countries with 40,000t sold to export.
With Soya prices falling, crude comparisons of values and protein (p) levels shows the disparity quite clearly. Soya meal @ £280/t (43% p) vs. Oilseed rape meal @ £190/t (35% p) vs. Beans @ £200/t (23% p).
Whilst protein content is not everything other benefits - such as energy - do not cover this difference, indicating that values may have to adjust significantly before many domestic bean buyers return. At the time of writing, November wheat is valued at £149.80/t.
Human Consumption beans
The old crop market has just one boat left to sail and is effectively over for the UK. Occasional container shipments may continue for a while.
This market will always be led by Egyptian buyers and an early new season market has set a premium over feed of around £30-£35/t. Traders may offer scaled fallbacks on their offer based on quality. Options also exist for feed sellers to receive a premium when human consumption values are confirmed at the point of agreement.
Extraordinary shortages from 2018 crop led to unprecedented prices for human consumption quality, with Australian beans fetching as much US$900/t and UK values rising to well over £350/t. Hence new crop is eagerly awaited with expectations that premiums will fall dramatically.
The experience of 2018 has taught buyers and users alike how to cope with lower quality and to develop ‘tricks’ in product development and marketing, to drive acceptance of alternatives. This knowledge suggests that the exceptional upward market movements of last season may never be repeated.
Peas are a similar story to the bean market with most of the old crop now traded.
There are some suggestions that some early top end contracts might now look a little dear and that min/max contracts may fall nearer the minimum. This would indicate that open market peas might look less valuable. That said, there is a long way to go and although crops are generally looking excellent, growers will need to pay great attention to maximising yield and ensuring top quality is maintained.
Whilst feed pea imports continue to arrive with values significantly below the current feed bean price, new crop pea prices are expected to be dearer than new crop beans.
Currency traders speculating on the political outcomes of Brexit negotiations have driven swings in the value of Sterling and this has contributed the opportunistic sourcing of ‘value’ feed peas.
UK growers and pea traders alike having seen pea prices will be eager to encourage some stability in this market to encourage continuity of production and supply, as well as demand from the new and emerging markets.
Quality is always key. With new crop approaching, old crops values continue to drift down with minimal trade, circa £300/t ex
Large blue peas
As with Marrowfat peas, but with a range for good quality £285- £300/t ex.
The next Pulse Market Update will be July 2019