Feed Peas Steady To Firmer

VANCOUVER - Feb 2/07 - SNS -- International feed pea markets finished the week's trading on a steady to firmer note, even though trading volumes remain limited.

European markets were unchanged to firmer in local currency terms, and higher in U.S. dollar terms because of weakness in the Euro versus the U.S. dollar.

Feed ingredients market participants around the world are already spending considerable time speculating as to the contents of the USDA's March 30 and Statistics Canada's April 24 seeding intentions estimates, as both will define price prospects for the coming year.

Oil remains an important influence because of the increased diversion of corn and other feed ingredients into the biofuel industry.

Though the economics of producing ethanol and biodiesel do not directly stack up with the cost of producing a barrel of oil, some market analysts argue northern hemisphere oil is heavily subsidized by the United States.

"Ignore those who attempt to use cost efficiency theories to discourage renewable fuel crop sources as their math falls short of what a real barrel of oil costs," argues Alaron Trading Corp.'s Tim Hannagan.

"When determining crude oil to fuel the biggest multiplier is the cost of our military input in protecting and securing oils flow. This is billions times billions of dollars. Real value is often disguised. Expansion of ethanol plants will continue through 2007 before leveling in 2008."

These are significant observations for the feed pea sector because they underscore the fact that the need to buy acreage of corn and other crops used to produce ethanol and biodiesel will continue for at least two more years, raising the income expectations of field pea producers.

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