Feed Peas Mixed, Feed Market Strong

VANCOUVER - Jan 11/08 - SNS -- International feed pea markets posted a mixed finish on the week, supported by continued strength in human consumption field pea markets and advancing protein and energy markets.

European markets were nominally unchanged in local currency and U.S. dollar terms. Markets in the United Kingdom were firmer on the week against a relatively tight domestic stock situation.

Corn competes with feed peas on an energy basis in livestock rations. Alaron Trading Corporation's Tim Hannagan said the USDA's latest crop production and supply-demand updates showed a large drop in forecast ending stocks for the 2007-08 marketing year. "The 14 million acres more planted in 2007 and record crop is not enough acres to meet demand. Corn's high is far off as we continue to price in increased corn needs for increases in feed lot populations. Ethanol production here and abroad especially in China and Asian neighbors.

"The key to trading corn is not seeing it as overbought as traditional U.S. grain traders suggest. We are in a world trading market environment and inflationary conditions elsewhere make corn very cheap here," Hannagan argued.

"We saw a sharp decline in corn ending stocks as demand outstripped a record production, suggesting that if you do not want to run out of corn in 2009 we better find a higher price to encourage more corn planting. We planted 14 million acres more in 2007 of which 11 million acres were stolen from beans. Beans too see the current pace of usage leaving their tank empty come 2009 and a mission to find a price high enough by march not only to keep from losing more acres to corn but find 6 to 8 million acres more to insure we do not run out."

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