Late October 2017

THE 2017 BEAN HARVEST WILL BE REMEMBERED AS GOOD YIELDS BUT DISAPPOINTING QUALITY AFTER BEING DELAYED BY LATE SUMMER RAIN

“The UK pea harvest was completed some time ago and the variability of both quality and yield from location to location is well documented,” comments Roger Vickers, Chief Executive of PGRO. “While, in general, the 2017 bean harvest will be remembered as good yields but disappointing quality after being delayed by late summer rain."

“The trade is estimating that the availability of human consumption quality beans will be about half that of last year at something under 100,000 tonnes. Estimated feed bean supply is around 500,000 - 600,000 tonnes. As reported earlier in these bulletins, the southern crop was heavily affected by Bruchid beetle and the northern crops have suffered staining issues from repeated wetting and drying prior to harvest.

“Looking ahead, the medium to longer-term agronomic and economic benefits of growing pulses remain strong, even though the exact pulse area in the UK is uncertain for now following changes to EFA rules. All that is removed is the short-term benefit of being able to claim EFA aid on a conventionally grown crop – pesticide applications being prohibited on EFA crop areas. It is hoped that this will not have a negative impact on 2018 crop area.

(More has been written about this on the BEPA web site: www.bepa.co.uk/.../249-16-june-2017-joint-bepa-pgro-statement).

“Harvest in the Baltic States is reported to have been significantly better than the UK in terms of insect damage, but there is reason to believe that they may also be suffering from some colour deterioration issues.

“Australian crops were enormous last year with a record yield of around 600,000 tonnes, resulting in stocks which depressed prices generally. Prices in Australia fell dramatically with a saturated feed market and any human consumption premium eroded to nothing. This followed a wetter than normal growing period with plenty of moisture and an increased crop area. With disappointing prices reaching growers, production has been switched to other pulses, including chickpeas, with a resultant decrease in anticipated beans from Australian crop 2017/18. Crops are forecast to be less than half that of last year.

“French exports of beans were static in the 2016/17 seasons at around 92,000t. They have almost completely lost their place in the Egyptian market, but have increased shipments for Norwegian fish feed to almost 56,000t. Whilst the French bean crop area in 2017 fell to just 72,700 ha, pea area has increased from 164,000ha in 2015 to almost 208,000ha in 2017.

“It is reported that Canadian pea production is down 20% this year, with a slight reduction in area but a sharp drop in yield. Green peas are once again carrying a premium to yellow peas, reversing the unusual trend of last year.

“In the USA the forecast for pea production area 2017-18 is 17% lower with a projected 45% drop in production.”

Franek Smith, President of BEPA, reports that Feed Bean exports continue to materialise to Europe destinations but with a larger stock than last year. If this is to compensate for the anticipated decline in human consumption sales of 100,000t, a further 40,000t will need to be shipped by the turn of the year.

Domestic feed consumption is down year on year injecting pressure into the market. This is driven by mild weather providing extended grass growth, the availability of cheap alternatives such as distillers grains and a narrower price spread between beans and soya.

Values have begun to slide a little through the month and, although apparently stabilised, the immediate outlook is viewed with a little pessimism. Current bean values are running at around £145-149/t ex farm, very similar to this time last year. A general view, if seeing a profit, might be to sell early rather than hold hoping the prices will improve. Without further feed bean export interest and lack of new compound feed buying, values may drift lower - but Sterling weakness or a reduction in mid range protein values would soon reverse this.

With decreased availability of Human Consumption Beans and also doubt about Baltic availability, the omens would normally be good for this trade. However, the buyers were slow coming to the market and this initially put pressure on the prices as available trades were touted around.

Premiums have now risen on the back of containerised trade to the Sudan (at circa £180-185/t ex) but this is a small market and will soon close. The Egyptian market is currently lower at around £165- £168/t ex and is being fed by Baltic supplies. Exports to Egypt are not helped by a fluctuating currency and recent risk experience in the UK trade.

Growers with good quality samples might make a wise decision selling early, accepting the high prices currently offered. The risk of accelerated deterioration in store is greater than normal if beans were dried significantly post harvest.

Growers of Combining Peas may have had variable results with crops and potentially disappointing results with pea prices in the last two years, however, the future is starting to look brighter. The significantly lower area and reduced quality of this year’s crop is likely to drive out much of the surplus from 2016 and remove much of the pressure that has pushed prices down. It may well be that for peas we have seen the bottom of the cycle and that a turning point has been reached, which would be a welcome development for committed pea producers.

Little has changed for Marrowfat Peas during the month - issues with excess bleaching and contamination remain a serious problem demoting many samples to feed quality. Values remain pretty much the same from top quality at around £230/t ex for export through to £170/t for canning quality and down to £145/t for feed grade peas. Most merchants have yet to release contract opportunities for 2018, but when they do, the feeling is that they may be around £250/t ex minimum.

Prices for the top end Large Blue Peas (great colour, soaking and cooking qualities) have risen to circa £220 ex as micronisers and exporters chase down the very best quality. The spread for the lesser quality falls to £175ex for more medium bleached samples, with the poorest samples barely reaching £145/t ex for feed.

Some domestic trade in Yellow Peas has taken place at around £170/t ex for March shipment, but generally crops have been grown to contract and the market is a quiet one. In recent times Yellow peas have had resurgent prices internationally, driven by shortfalls in world markets and substitution for chickpea shortages in India and elsewhere. These corrections can be swift and prices have come back from their highs of a few months ago but remain good.