French Crop Fuels Feed Peas

VANCOUVER - Sep 8/06 - SNS -- European feed pea markets continued to strength in local and U.S. currency terms, reflecting steady internal demand for the commodity and a smaller then initially expected crop.

The Union Nationale Interprofessionnelle des Plantes Riches en Proteines (UNIP) says field pea area in France ended up around 262,000 hectares, down from 326,000 last year and roughly half the area sown throughout the 1990s. Yields are estimated at 4,400 kilograms per hectare for a 1.152 million metric ton (MT) harvest, down from 1.355 million last year and 1.675 million MT in 2004.

At this level of production, France will have difficulty meeting all the competing needs for the crop. This has already translated into a strong upward swing in grower bid levels in the country, which finished the week ranging up to Euros 140 MT, versus 136 a month ago and 123 at this time last year.

Markets in Belgium and the Netherlands have been unable to resist the upward trend in France, and values there are also up from month and year earlier levels.

While affording markets a strong fundamental basis, it is unlikely higher prices for peas will translate into improved import demand from northern European buyers. In fact, total European demand is expected to be down sharply this year on account of improved crops in Spain -- Europe's main player on feed pea markets in 2005-06.

Markets for corn and soybeans are not expecting any bullish surprises in Tuesday's crop production updates form the USDA. Demand for these commodities for biofuel will be up in 2006-07, but that has been factored into prices, with the result the focus is on steadily improving yield results in the United States.

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