Mixed Week For Feed Peas

VANCOUVER - May 24/08 - SNS -- European feed pea markets were mixed during the past week, with values in Belgium and the Netherlands declining, while grower bids in France showed some improvement.

Market attention in Europe has switching to new crop, with local harvests quickly approaching. While western European crops will be down over last year, field pea production in the Ukraine could rebound from last year's drought savaged crop, Increased output would compete directly with Canada on European feed pea markets and potentially for human consumption demand from the Indian subcontinent.

Looking at major feed ingredient markets, Alaron Trading Corporation's Tim Hannagan notes the focus in corn markets is switching from planting the crop to "weather's impact on growing. Due to fairly cool evenings our emergence have been slow but we look for a measurable increase in emergence the next 12 days on a warmer pattern.

"Two summer (weather) forecasts have come out. One sees a late June heat dome building in the western grain belt of Iowa heading west and very dry conditions from July 1st through August. This would hurt about 35% of our feed grains. The other sees a dry western belt mi-July into August with both seeing the eastern grain belt of Illinois east being normal on moisture to above.

"Needless to say, with a historically low ending stocks number for next year, there is no margin for error in the growing season. A price rally of 2 to 4 dollars could occur quickly as July will be our key month for yield development with our late planting. . . Traditionally traders return after Memorial Day and buy corn and beans as we usually have enough planted to start building a weather premium in or a higher price that reflects the uncertainty of the growing season," Hannagan said.

"Like corn, soybeans too look at very low ending stocks next year making this year's growing season critical to keep from running out. Any problem in July and august and beans will explode on price rationing. The Argentine farm strike talks went poorly Thursday leading to a sharp opening rally Friday. Like corn, beans too seasonally rally after Memorial Day but a month end correction next week if crude oil pulls back could occur."

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