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PULSE MARKET UPDATE - MAY/JUNE 2020

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FOR SOME TIME NOW THE MARKETS FOR UK PULSES HAVE BEEN QUIET …
      
Roger Vickers, Chief Executive of PGRO, comments on pulse crops ...

It has been noted elsewhere that the world has been facing a series of pseudo biblical events. Fires in Australia followed by floods, locusts across much of the Middle East and now India, ‘plague’ in the form of Covid 19 and in the UK unprecedented wet in the autumn followed by what must now surely be defined as a spring drought. These strange times continue to challenge in many ways.

For some time now the markets for UK pulses have been quiet. Much of the UK pea crop is grown on contracts so there has been relatively little free market produce ex crop 2019 being offered. The bean market too has been largely quiet for many weeks. It seems relatively few producers have held back marketing their grain other than to offer stock surplus to their own seed requirements once drilling for 2020 crop was finally over.

In general, drilling of the spring crop has been late. Delayed by the wet soil conditions persisting over the winter period, many crops were established in far from ideal conditions. Once the land was fit to travel it began to dry very rapidly and it has been a race to get spring crops sown into the retreating moisture in the topsoil. The result has in many cases seen patchy establishment, short crops and correspondingly low flowering height. The concern is that if significant rain does not fall soon the yield potential and quality will be compromised further. It is easy to focus on the poor looking fields - but in reality the picture is mixed. Not all crops are affected in the same way, and there are many that look set for very good performance given rain soon.

The UK pulse crop area remains a conundrum. Various surveys and trade estimates suggest between a 10 to 20% increase in area, but with some now projecting a minimal increase in national yield. Harvest is still several weeks away.

Reports suggest that the Baltic region has a smaller crop area than in 2019 but their weather pattern has been better and the crops are looking good. Forward selling is taking place. This suggests at this early stage the Baltic will once again provide the main competition to UK-produced beans immediately post harvest.

The Australian growers have increased their crop area. Reports suggest that the ground water levels are as high as they have been for many years following very significant rainfall and there is optimism that the Australians may produce double their 2019 crop, perhaps selling up to 450,000t.  A significant proportion of this will head towards Egypt in the early part of 2021.

It seems a while since this report considered competition from France, but crops in Northern France have received plenty of rain this season and pulses there look in good shape so far

Lewis Cottey, President of Pulses UK, reports on UK pulse markets …

Feed Beans …

Whilst valuing new crop is currently difficult, buyers are anticipating the new harvest and may offer around £200/t ex farm for feed beans. There is no real market for forward human consumption deals at this time, but a £20/t premium might be expected for the better quality samples post harvest. Perhaps guarded by the uncertainty around production, interest from growers in selling is limited.

With few immediate end user outlets all this puts the value of the old crop under pressure. As a result, old crop values are falling back from the £240/t levels that have been seen for a long period. A more realistic expectation might now be £225/t ex.

A weak value for Sterling will help maintain values in the export market for UK sellers.

It is anticipated that the ceiling for feed beans in the domestic market is around £210/t, the likely trigger point for the importation of Baltic peas as an alternative feed stock.

The caveat to all of these post harvest values are November wheat futures (currently around £170/t, suggesting a £30 premium for beans), which tend to set a baseline and, of course, final harvest outturn in the different production areas.

Human Consumption beans …

With no remaining good quality stock offered from the 2019 crop, and with plentiful stocks in hand, the buyers are looking ahead. No real market exists at present. Some initial forays into the post harvest market are being made but this is not aided by uncertainty in availability and an overall reluctance of growers to commit at this stage.

Combining peas …

Following a surge in retail buying at the outset of the Covid lockdown, interest has slowed dramatically and there is little trade in peas at present. Some buyers have taken in stock to ensure continuity in the supply chain to end users, but with most production grown and sold on contract, the opportunistic sales for free market productions are currently few.

The values suggested below are for this reason largely theoretical, rapidly aligning nearer to new crop contract values.

There were plenty of attractive contracts available for the 2020 crop and enthusiastic uptake has been reported. It could well be therefore that pea areas have increased a little more significantly than beans.

If 2020 crops become compromised on yield, it could well be that contracts with min/max agreements will be realised on the higher side. Again this is very dependant upon yield and quality retention.

Marrowfat peas

Off contract sales samples with suitability for cooking may fetch between £325-£350/t ex farm.

Blue peas

Very little trade for old crop is taking place. Samples for sales are also few and far between. Values are nominally £250-£280/t ex farm, depending upon quality.

Yellow peas

Also little trading activity. Offers might be expected in the region of £235-£240/t ex farm.

Maple peas.

Values have increased recently on the lack of availability in a small market. Offers of up to £325/t ex farm might be realised.

The next Pulse Market Update will be July / August Harvest 2020