Pulses – Recent news from Canada is that the weak pricing this last season really hurt processors and farmers to the north. Some have between 6-18 months left to make some changes and profits to save what they have. Sad news overall and concerning as so much supply comes from Canada and they have historically been a solid trading partner in the Ag and Food space especially.
Peas – Pea acres are expected to be higher than expected and higher than last year, mainly in favor of green peas rather than yellow peas. This has the potential to close the gap between the two if both crops have good yield. The green peas however have high exportability to India and China. Of course those two haven’t bought as much this past year due to the close off of India and the US-China trade war. Interesting times ahead if both open up, the perfect storm for supply and price would be if they both open at the same time. Ensure proper coverage is in place but don’t pay a panic premium either. Logical and early contracting is key here as many will panic buy when these markets open.
Chickpeas – Chickpea acres are expected to be 60% of last years acres which is likely to raise the cost of chickpeas again this year. Last crop’s farm gate pricing for chickpeas used in pet food in many cases didn’t even cover the farmer’s cost of input in some areas, food grade was not much different. Lower acres reflect farmers shifting back to a more profitable crop. With some decent carry over we may not experience big shifts in pricing right away but carry over remains to be seen and the usage rates across the industry seem to be stable still. 19/20 crop has the potential then for an increase.
Lentils – Planted acres will be down which is no shock as Lentils have been at a really decent low compared to past years. This one has the potential for a jump should supply get tight with less acres for next season. Plan early and cover needs if using heavy on lentils. In addition the gap between Red and Green hasn’t been this tight in a while and Greens typically pull a good premium when things get tight.
Salmon – EU and Scandinavian supply has been tight lately and bringing a premium over South American material. The value buy is from South America right now but quality at times is a bit different than other regions. Fishing season should be interesting and telling on if EU/Scandinavia material becomes more readily available.
Poultry Meals – Flooding recently caused disruptions in the market for one major poultry meal processor and ultimately flooded one of their facilities. Poor weather has been a struggle this past few months with snows causing delays but to lose a major processing facility caused quite the ripple lately. Continue to see markets firm on poultry proteins right now, typical of this time of year though. I would expect some relief as alternate supply plans start to take hold and the market reacts along with the normal relief in prices we see mid-summer. Long positions, unless absolutely a savings are not what is advisable at this time of year.
Pork Meal – Recent reports now confirm China has cases of African Swine Flu in all provinces and most people believe what news is coming from China is well under reported. Why does this affect us? Well, Smithfield, the largest pork producer in the world, is owned by WH Group from China. Reports are already circulating about Smithfield and other pork processors shipping hole carcasses and cuts to China and this supply isn’t headed into the Pet Food market like usual. China is a large consumer of pork and with ASF taking hold all over the country tightness of supply is expected at some point. Be prepared to buy on budget numbers and don’t short your buys as this may be a bidding war at times as China needs more pork.
Updates Provided By : Robert Lee, LANI Strategic Sourcing Manager