Pulse Crop Market Structure/Price Signals

[charliep]

Any comments on market structure for pulse crops (beans, peas, lentils, chickpeas). We have a real discussion going around CWB wheat but we haven't commented about other crops. Comments I have are as follows.

1) Pulse crops are tremendous opportunities agronomically and are finding a permanent place in rotations. Acres are likely to continue to grow.

2) Pulse Canada is doing a tremendous job of market development but with the acres we are starting to grow/percentage of the market, Canada has potential to overproduce our customer base (at least as we know it today).

3) Prices for pulse crops at the international level tend to be less visible (a cash market) and in farther away places/in different currencies (a person needs to be able to take one of this prices and deduct expenses back to local processor). Because of this, it is harder to evaluate prices to determine fairness of western Canadian prices other than relying on competition in the market place.

4) There are no risk management tools in the market place that allow forward contracting. The only risk management tool for a grain company or processor is to back to back a trade (buy from the farm manager and sell to the buyer almost simultaneously - difficult to do at the best of times).

How comfortable are farm managers with pricing of pulse crops? What information is needed to improve this process? In crops where acreage is growing as quickly as pulse crops, how do we (royal we so includes the whole industry) make sure we are growing market demand just as quickly?

[JD_GREEN]

Good idea Charlie, a discussion such as what you propose is what is needed. There is no doubt that yes we are growing more and more special crops, but where do you get the information that we are overproducing?? Take chickpeas for example: There is not a chance in hell we will ever grow more than market demand for Desi chickpea. Kabuli are a different issue, even that is unlikely tho due to a variety of reasons. Laird lentils markets are soft right now but not for reasons of overproduction. Would like to hear more input from others on this topic

[darren]

I farm and run a small processing plant in S central SK.
1.In our area 90% of producers grow lentils,peas or chickpeas. With the switch to direct seeding producers need a crop that does well on cereal stubble. I always wondered why AB growers left the lentil market to SK.
2 The world loves our quality but s the logistics of getting our product to port. Strikes, shitty rail service, etc..
3. Price discovery is a problem as the traders seem to hold all the cards but the big wrecks have been coming from farmer owned plants that are desperate for sales at any price.New crop lentils are 15 cents per pound, chickpeas are 25-27 cents for 9 mm, this is 10 cents off todays spot price and likely too cheap to take seriously. Prices will probably soften but not that much. That said, it is still a profitable price for most guys and it won't bankrupt you to lock in a profit.
4 Risk manegement tools are limited to contracting new crop and only the first 600 lbs. an acre and crop insurance. In Sk. crop insurance coverage for chickpeas is over $150. bucks an acre on any soil class and stubble is the same as summerfallow. It costs over $10 an acre but seems pretty reasonable to me. .

[charliep]

Thanks for your comments jd_green and darren. I am up in the Peace River area this week doing a pea presentation so will be using your thoughts. Like both of you, I am a real optimist about the future of pulse crops. You mentioned the twin challenges of logistics (getting product moved to meet our commitments to customers) and pricing (both from the visibility side so people can be comfortable that the price they are getting is fair and risk management to allow some sort of hedging both for farm managers and processors/grain buyers). What way should the industry be moving on these issues?