Yellow Peas Helped by Demand

VANCOUVER - Feb 10/06 - SNS -- Few changes were noted in international feed pea markets, with market participants concerned about the potential impact massive intervention in commodity futures markets may have price relationships between cash and futures.

While there are no perfect hedges for feed peas, some of the other major ingredients used by feed manufacturers can be hedged. More importantly, there is still some relationship between cash and futures markets.

The issue was put in neat focus by Alaron Trading Corporation's Tim Hannagan who noted, "We have seen a lot of fund buying, especially from funds that traditionally do not trade grains but with large trading funds holding over 70 billion dollars they just can not only buy metals and energies with current limited position limits so they are spilling over to grains and make it more unstable as they can take profits off any news or price."

Hannagan remains of the view that corn is fundamentally bullish into July and September "as demand remains improved and our March 31 planting acreage report comes in showing 2 to 4 million acres less going to seed this spring but a late February correction is not ruled out."

By contrast, the soybean picture of "still bearish for demand as we are running behind a year ago on demand while inventory is at record levels. Our USDA crop report Thursday put our ending stocks for 2006 at 555 million bushels up 50 from our January report and the highest on record. The higher ending stocks inventory came as they lowered export projections. If our March planted acres report comes in as expected showing 2.5 to 4 million less acres to be planted this spring we will surely see larger inventory in 2007."

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