World's Feed Pea Market Eases

VANCOUVER - Feb 24/06 - SNS -- International feed pea markets ended the week on a slightly easier note in response to weakness in major feed ingredient markets.

This was most obvious in European markets, which is of critical significance to Canadian and U.S. exporters looking to sell additional merchandise there before the end of the marketing year and to soon start building a new crop export program to maintain shipping momentum through the last half of the calendar year and the coming harvest.

Significantly, there is little variation between spot and new crop feed pea markets in Europe, suggesting market participants do not expect a significant increase in local production.

Feed peas operate within a large complex and weather has already become a huge factor in new crop markets, argues Alaron Trading Corporation's Tim Hannagan.

"The current La Nina weather event has brought drought to the southwest and southern delta for the last 3 to 5 months with some suggesting it will move into the midwest this spring and summer. That is to be seen but after a hot and sometimes very dry summer last year, followed by a warmer and drier than normal midwest winter some say the midwest drought in on.

"Just a note on drought talk. Last year saw the use of bio-genetic seeds for both corn and beans produce unbelievable yields under conditions that 10 years ago would wipe out a crop. So expect our usual weather premium to pale by comparison to previous years. It will take a drought like 1988 to take a third or more of the crop away."

Concern over drought has stimulating buying interest in major feed ingredients such as corn. "Everyone wants to be long corn, long term, " Hannagan said. "Without a crop in the ground we only have demand to price into corn. That means corn will still follow other markets from time to time."

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