MAY 2016

"Last month drilling was proceeding apace. Significantly, however, we were hit by some unseasonal cold and wet conditions. Particularly further north and on heavier ground, many spring sowings were considerably delayed," comments Roger Vickers, Chief Executive of PGRO. "Plans for beans in a small minority of areas were reportedly abandoned. The break in conditions in later April provided some respite and much of the remaining spring drilling was recovered. The general trade consensus is with clarity and understanding of growers' options regarding CAP and the catchiness of spring sowing, the UK pulse crop area may be slightly less than in 2015."

Chris Collings, President of BEPA, comments that interest in UK pulses for all established markets remains good for the new crop harvest. That said, at this time there is little trade with growers focussing upon getting crops sown and everyone awaiting a better view of the likely supply position in the autumn.

The watchword from the trade to growers as ever remains quality. Produce of good visual quality will command premiums and attention should be given to the crop at all stages to ensure it is realised. Existing, new and returning markets need to be able to rely on quality produce from the UK. Only then will markets be retained and the UK reach preferred origin status.

The trading of old crop feed beans is largely over. Significant commitments have been entered into and movement is awaited. Prices are around £130 /t ex farm largely unchanged.

Feed requirements fall at this time of year as livestock are increasingly out to grass.

Buyers are, as always, looking at their options for the months ahead and falling commodity values for alternatives provide the ideal opportunity for them to sit on the fence.

Interest in the bean crop remains good, and once the size of the UK crop is better understood by both producers and buyers, interest will return more strongly. Currently little interest exists in trading new crop from either side.

New crop prices are similar to old, further disincentivising buying and selling. If growers can see profit at the levels they are offered, selling a precautionary percentage forward is worth consideration. It is reported that commodity markets in general are looking for reasons to rise, but there are no certainties, and rumours in markets or weather reports can easily cause fluctuations up or down.

The export markets for human consumption beans appear fully supplied. It is unlikely that old crop not already committed will, a) make the grade, or b) find a home outside of the feed market at this stage. With effective closure of the export market, at least temporarily, additional availability for the feed market may put downward pressure on the prices. The risk of this remains low, if as suspected there is little left to trade.

Notional premiums over feed are circa £15-25/t. The new crop interest again remains low and premiums and values are similar.

The ability of Egypt to pay is an issue due to its importance as the destination market for so much of the UK bean crop. The situation continues with troubled cash flows and traders exposed to considerable values for goods already shipped. Existing consignments are destined for this market but will not be sent before payments are received and shipment dates are rolling over. The local market is currently well provided and buyer demand is limited.

A year ago the $US/EGP exchange rate was 7.62, today it is more like 8.8 following a recent devaluation to combat black market US$ exchanges. The country's foreign reserves have been reduced by more than half to about $16 billion since 2011. In that time Gulf nations have pumped more than $20bn into Egyptian coffers and in the last few days a further US$4bn has been pumped in by the UAE.

Australian Faba beans have not featured so heavily in recent months. Prices have been relatively high and despite their generally good quality the market reported here has been largely focussed upon UK and Baltic sourced produce. Australian crop, however, has been present and will continue to give competition in the future. A feature of the 2015 crop - concerns about drought - are already being mentioned for 2016 in parts of Australia.

The Sudanese market will reopen in June but the local crop is reported as having been excellent and the demand for imports is not materialising. This market is unlikely to spring back to life before the new crop.

Turning to combining peas, a small but intended surplus of marrowfat peas will be carried into the new crop, providing much needed security of supply to the market in the event of a lower than expected harvest. An increased planting is anticipated in 2016 and any new crop open market productions are currently valued at £220-280/t ex depending upon quality and location. It is believed however that most productions are already against buy back contracts.

From the +/- £400/t values of a couple of years ago, borne on the back of significant shortage, prices are trending toward more traditional levels. That said, margins for growers remain very strong and grower interest is already being expressed in crop 2017.

It is now predicted that there will be almost no carry over of large blue peas into the new crop. Lower values have allowed exporters to be competitive in export markets with UK quality giving the edge. Destinations that have been missing for many years have returned and even interest expressed from Indian buyers. New crop values are estimated at £160-£180/t ex. Much will depend upon the volume and quality at harvest, premiums will be attracted to the best produce.

It is still viewed that, although yellow pea values for crop 2015 were good, the UK is less well positioned to compete with the larger production areas of Canada, Ukraine and France. Crop areas are likely to remain very small, being produced against contracts already secured.