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PULSE MARKET UPDATE - JUNE/JULY 2019

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BEAN VALUES SHOW STAYING POWER - BUT AT WHAT PRICE?    

Roger Vickers, Chief Executive of PGRO, comments that bean values show staying power - but at what price? Whilst there is little trade of the old crop to be had or taking place, bean prices have remained remarkably high - possibly propelled by short sellers still having to make good - and specialist users with no alternative.

There is a generally good feeling about the new crop. The excellent ground conditions into which it was sown provided a strong platform, and just when the prolonged dry period extending out of winter looked likely to impact potential yield, significant rainfall was received in the June deluges. The ground generally reacted well with most rainfall being absorbed, and the crops took off.

By and large, with the inevitable regional exceptions, bruchid damage looks likely to be less than last year and the most significant threats to beans now appears to be premature defoliation through disease before pod fill is complete.

Peas also look good, but there has been significant aphid damage this year and it is apparent that there is a lot of virus around in both pea and bean crops. Foot rot is a potential problem for peas that sat in wet soil following the rain. Pea moth counts are also high, and if left unattended, will have significant negative impact upon quality and yield.

Recent reports by the Financial Times focus on the rising demand for meat substitutes and certain high profile producers using yellow peas for protein. Significant demand worldwide is being projected in many such reports:

https://www.thisismoney.co.uk/money/markets/article-7214645/Vegan-food-trend-sees-surge-demand-yellow-peas-needed-meat-free-burgers-sausages.html.

This is potentially good news for pea producers worldwide.

In the feed Industry in Europe, numerous industry projects are seeking to replace soya with alternatives, including peas and beans. The German pig industry is an example as featured recently in a Allaboutfeed.net. This could see further developing demand for EU grain legumes in the future.

Baltic and continental crops are experiencing significant dry conditions placing a doubt over their likely yield.

In Australia, unprecedented regional drought is casting doubts on their ability to deliver 2019/2020, despite earlier predictions of a 10% increase in crop area:

https://www.dailytelegraph.com.au/news/nsw/devastating-reality-as-drought-continues-its-destruction-in-bush/news-story/24ee6dd2c65ffd8da0f620dca95a1101

 

UK Pulse markets ...

Feed Beans

Lewis Cottey, President of Pulse UK, reports that prices for tiny parcels of old crop that simply must be had by specialists unable to switch are still trading at about £255/t ex, but these are exceptional. There is very little opportunity to buy.

New crop is holding very firm and growers near the point of use can achieve over £203/t ex farm. There is currently a premium of around £55/t over wheat, which is significantly above the more normal accepted level of +£30/t. Despite this, there seems a significant reluctance amongst growers to sell ahead of the crop.

At these values the UK compounders are struggling to accept beans into the ration and are looking at alternatives such as rape or soya meal. It is known that some buyers actively seeking to source beans are finding no sellers. As a result, importing peas is being considered to secure their product pipeline. If this happens, beans may be shut out of the ration for much of the winter.

With a potentially larger crop coming, this poses questions for the future direction of bean prices. Whilst in the short term this is good for the sellers - long term it may be detrimental. It emphasises the dilemma that feed bean buyers have had for many years - that of continuity of supply.

Human Consumption beans

Influenced heavily by the base feed value, forward crops of top quality for human consumption markets are carrying a premium of around £30/t.

With sellers for feed reluctant, sellers committing to human consumption quality are extremely few and far between. Traders may offer a base feed price with options to upgrade once quality is known.

Traditional markets are flirting with stock and political issues (national debt defaulting problems with neighbours) which are restraining buying interest for now.

A strengthening of the Egyptian pound against the US$, and any potential weakness in sterling, will help exports.

Combining Peas

Forward prices for the 2019 crop are almost non-existent. Much of the crop is being produced on predetermined contracts and there is little trade taking place.

First estimates based upon the outputs from a wide range of vining pea crops suggest decent crop potential with average dry pea yields of  3.5-4.0 tonnes per hectare.

Nominally good quality large blues peas on the open market could be valued at about £280/t ex farm.

Marrowfats on the open market (depending upon quality) might fetch over £350/t ex, offers are sure to be clearer as harvest arrives.


The next Pulse Market Update will be August/September 2019

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