The CSCA Convention 2021/
Day 2

The second day’s sessions analysed pulse quality throughout the supply chain and provided outlooks on chickpeas and peas in Canada.

Missed the conference? Members can find our main takeaways for Day 1 here and for Day 2 below. 

Panel: Defining Quality Throughout the Food Supply Chain

In this panel, representatives from across the pulse industry gave insights into issues of quality and what challenges are facing growers, processors and plant breeders.

Tom Warkentin, a professor and the Ministry of Agriculture Chair in Pulse Crop Breeding and Genetics, discussed how the definition of pulse quality has changed over the last thirty years.

• In the 90s and early 00s, the emphasis was mostly aesthetic and focused on size, shape and colour
• Pulses tend to be purchased with little processing so buyers want them to look nice at the outset. With peas, for example, bleaching resistance is important
• In the past decade, more quality traits have been added: eg. protein concentration in peas and faba, seed coat quality, trypsin inhibitors and tannins
• Work is being done on micronutrients and into the future, the amino acid profile will become increasingly important
• Amino acids are difficult to measure as there are a lot of different ones and the traditional measuring system (HPLC) is expensive and impractical however there are several other tests that are easier and quicker although less accurate

Steve Innes of Bonduelle explained how pulse quality can be viewed through several lenses

• The characteristics of the pulse in terms of colour, consistency, size, water-holding capacity, protein and starch
• Sustainability factors: where they’re grown, the country of origin, consistency of supply, pesticide residue, how they’re produced and logistics
• Food safety
• Logistics: quality of delivery and making sure the product arrives on time

The panelists agreed that pulse quality is getting more and more comprehensive, across the whole process from farm to fork.

Charlie Kauffman, Sr. Product Specialist in charge of Ingredient Performance at PerkinElmer, discussed what common quality attributes are important to stakeholders.

• Quality encompasses a complete characterisation of the product starting with an accurate and efficient measurement of protein, starch, fibre and fat
• He reiterated that eventually acid breakdown will be commonly measured
• Many clients are focused strongly on “pulse performance”, particularly for plant-based meat and dairy, such as starch cooking, gelling performance and hydration behaviour
• As they become involved in increasingly complicated ingredient systems, there are modifications that get made to the pulse protein ingredients or starches to either add functionality or improve palatability, which have an effect on characteristics
• Companies look at the effect of heat, fermentation and other chemical modifications.

The panelists then analysed some of the challenges in pulse quality.

• Innes explained how lentils often have difficulties when being canned or frozen as it’s hard to get them to hold together after processing
• Likewise, he explained how the color of chickpeas is a challenging aspect. The color of those grown in North America have difficulty meeting the colour requirements for certain markets
• Higher end markets want a bright yellow colour after cooking and canning
• With dry beans, the cracking of seeds is the number one challenge, especially in larger varieties

Mehmet Tulbek of AGT had further insights on the topic:

• There is an issue of whole seed hardness and how some seeds do not absorb water because dry conditions can make them develop an impermeable husk
• The pulse ingredients industry is still quite young and AGT is learning a lot about whether products are consistent or not when it comes to processing them for animal protein substitutes
• Overall, though, he said they were pleased but highlighted the importance of monitoring quality throughout the whole process

Mr. Kauffman outlined the most difficult quality aspects to measure in pulses.

• There are two sides to the pulse quality coin: what it is - protein, fat, fibre, etc -, and how it is - how it reacts to processing and cooking, the seed coat permeability, how the starch performs when cooked, how it is as a flour vs as a whole pulse, how does it retrograde to form a gel with proteins?
• Functional attributes are harder to quantify and the current movement in the industry is towards finding ways to measure those in a scientifically responsable way and quantify them so as to be able reproduce them as quickly and effectively as possible
• For example, with whole lentils being canned and cooked, it’s hard to predict how permeable the seed coat will be and it is necessary to have a versatile performance analyser to evaluate them and identify any issues while at the same time keeping them intact.

Finally, the panelists discussed how the Canadian pulse in can differentiate itself in terms of quality

• Kauffman gave the US perspective and discussed how the Canadian origin designation has lots of marketability as it is favourably seen and manufacturers adding an origin destination to consumer-facing labels would go a long way towards driving market share
• Tulbek highlighted the importance of collaboration to help strengthen crop quality and supply as well as working on creating a stronger food safety and regulatory framework
• Innes stressed the importance of keeping up Canada’s reputation for being a good provider and excelling to the next level. He highlighted the work to be done in pesticide use, measurement and residue and suggested following movements in Europe about restrictions and consumer demands.
• He pointed to life cycle analysis, carbon footprint, better nutrient levels, less fertilizer and water usage as differentiating factors
• Warkentin reiterated the idea of promoting the low carbon footprint of pulses, specifically their nitrogen fixing qualities. He also suggested some promotion of the active research community in Canada and their work on innovating pulses for the future

   Chickpea Market Outlook

In this highly informative session, Chuck Penner of LeftField Commodity Research gave his insights into the chickpea market for 2021/22.

Main takeaways

• Fewer acres and poor yields in Canada
• More acres but poor yields in the US
• Old-crop stocks in very strong farmer hands
• No big production response in other countries, small improvement only in Russia
• Globally, things don’t feel as tight as 2015/16 so prices will probably not return to record highs
• The U.S will be the most aggressive bidder in Canada but will also need to look elsewhere

Western Canada outlook: production

• Statscan just came out a few days ago with a production estimate of 63,000 tonnes
• Not a record low but a very small crop
• Yield numbers were at a record low at 780 lbs/acre
• Estimates may be lower than actual because statscan numbers are based on a model and they are not able to ask farmers what their harvested acres will be
• If yields were really that low, some fields may have just been written off and not harvested at all
• LeftField guesses between 60-80kt production
• Final production numbers in December will be important to watch
  
  

Supplies

• StastCan numbers observed as possibly too high
• 500,000 tonnes of supplies recorded for crop year 2020/21 and around 325,000 tonnes estimated for 2021/22 - seems high considering price behaviour
• LeftField predictions (incorporated raised domestic use): a little less than 450,000 tonnes, of which 200,000 carry-in, for 2020/21 and a little less than 250,000 tonnes for 2021/22, of which 150,000 carry-in
• Supplies dropping roughly in half from last year

Exports

• First half of the year was very subdued
• Really picked up in second half with increase of volumes into Pakistan at first and then into Syria and Lebanon in April and May
• Strong finish with around 18,000 tonnes in July
• Based on supply levels for next year, it will be difficult to get close to that number
• US was the largest buyer 4 or 5 years ago but has now been replaced by Pakistan
• This is expected to shift again next year with US being the strongest bidder again

US Outlook: supplies

• According to USDA, acreage has increased by a third in 2021 but crop expected to be down by a third
• Yield estimates down 35-40% from average
• Supplies expected to drop from 450,000 tonnes to a little over 300,000 tonnes, which relies on slight increase in imports

Disposition

• Domestic use has averaged around 180-190,000 tonnes/year over the last 5 years
• Expect that domestic use will remain solid but exports will be cut back because of tight supplies

Imports

• Traditionally Canada is the biggest supplier but at times there have been larger volumes from Mexico and Australia
• Challenge will be with reduced Canadian supplies and export availability, where will the US get their chickpeas?
• Mexican crop was roughly 165,000 tonnes, which is increased but still below average and not enough to satisfy US demands
• Mexican prices for kabuli are moving back towards ealy 2020 highs but not back up to record highs of 2016/17/18
• Indian kabuli crop was around 250,000 tonnes available for the 2021/22 but Indian exporting year is off to a slow start compared to previous years
• Prices in India for kabulis are pushing up past earlier 2020 highs but still far from 2016/17/18 highs and probably won’t reach them despite tight supplies
• North American picture could still be different because of changing dynamic
• Russian exports hit around 300,000 tonnes in 2020/21, down considerably from the previous year
• Russian moves more smaller calibre kabulis and Pakistan is their largest customer
• Suggestions that Russian production is up 10-15% in 2021 but not enough to turn the market around
• Argentina has shown a drop in production, following the downward trend and based on some acreage numbers, production looks to be around 70,000 tonnes, mostly 7/8mm

Canadian chickpea export outlook

• Probable maximum of 110-120,000 tonne export program
• The US will be the most aggressive bidder in 2021/22, already seeing this in the prices on both sides of the border
• Cutbacks to Middle East and Pakistan, which Russia can fill

Canadian ending stocks

• No matter what numbers you look at, ending stocks will drop down to minimal levels
• This will be helpful in answering questions about what actual supply levels are
  
  

Price ideas

• In the posted bids, direction and momentum is clearly higher
• No signs yet that demand is being rationed
• Farmers are very reluctant to sell if they have product - in some cases they don’t
• Where will demand start to slow in response to prices
• Prices are moving towards highs of 2016/17/18

Dry Pea Market Outlook

Once again, it was Mr. Penner of LeftField who provided a comprehensive analysis of the dry pea market as it stands

Canadian pea production

• Much smaller crop than last year
• StatsCan estimated 2.63 million tonnes: a 2 million drop from last year
• Yields were a little over 25 bushels/acres
• StatsCan’s model doesn’t include an estimate of harvested area so yields this low would suggest a number of fields were written off and not taken to harvest
• LeftField estimates a little lower than StatsCan: around 2.5 million tonnes
• Yellows down 42% from last year, greens 60% (because of shift of acreage out of greens into yellows) and 60% drop for minor classes of peas

Supplies

• Looking at carrying forward some larger supplies of around 500,000 tonnes into 2021/22
• But combined with the drop in crop size, total supplies are still down 1.75 million tonnes from last year (36%)
• Already seeing this decline in the price behaviour
  
  

Pea production from other exporters

• Russian crop expected to have increased to some degree
• At most 1 million tonnes available from other exporters - can only partly fill the North American gap
• Trade patterns will probably be changed

Canadian exports

• Exceptionally strong start to the year, mostly in yellows, but a sharp drop in June and July, which were well below average
• Volumes were already declining before the crop problems - not necessarily a supply issue but rather it was a demand situation that allowed Canadian ending stocks to come in at 500,000 tonnes

Chinese pea imports

• China accounted for 72% of Canadian pea exports
• Bangladesh 2nd major buyer with 13%
• Chinese pea imports last year were almost 3 million tonnes
• This year they started off above that pace with strong demand but question is how much of that was coming from the feed sector
• Softness of Chinese demand going forward will come from fewer imports from feed market
• Remainder: fractionation market, which is estimated to be around 1.3 million tonnes
• Monthly Chinese pea imports are declining as of late

Indian pea imports

• A non-factor in the pea market but their absence could be considered a factor
• In 2020/21, there were almost no pea imports because of quantitative restrictions and prohibitive imports
• The question is being raised about relaxed import tariffs in India due to rising prices in yellow peas and desi chickpeas
• LeftField feels prices are not yet at these levels: prices have moved above MSPs but probably not yet high enough to provoke easing of restrictions
• Price momentum is higher and if they continue to rise (no relief in sight for desis in India until the Australian crop), there will not be relief until the rabi crop
• However, there may not be any peas left to buy at that point meaning India may have to lower phytosanitary restrictions in order to procure from the Black Sea region

Black Sea prices

• Sharp drop off in prices from early 2021 levels as the harvest approached but this drop was extremely brief
• Prices already moving sharply higher
• Demand is coming from Western Europe in terms of feed peas, but also domestic industries and other buyers in South Asia aside from India, eg. Pakistan
• Entire global complex is strengthening because of this situation, largely driven by what’s happening in North America

US pea production

• Not usually as relevant as it is this year, especially for Canada
• Seeded area was slightly lower but based on ideas of 35-40% drop in yields, the crop will be considerably smaller - down roughly half
• Green pea production will drop harder than yellows, according to USDA greens will drop 58% and yellows 44%
• This wouldn’t have been a huge issue a number of years ago but domestic use has been increasing recently in the US, particularly the fractionation industry
• Domestic use will be almost double this year’s production levels so the US will need to import more than normal

US supply

• To maintain supplies of a little over 1 million tonnes, imports will need to be considerably boosted - somewhere in the area of 450,000 tonnes
• Normally Canada could meet this demand but not this year
• US buyers aggressively bidding for Canadian peas
  
  

Canadian pea exports

• Drop of 1.25 million tonnes - most will go to the US
• Largest cutbacks would be in South Asian destinations eg. Bangladesh, but also in China although there may be less demand if feed demand is reduced

Canadian domestic use

• Expect there to be increased capacity from fractionation plants moving to full capacity this year but that should be cushioned by drop in feed consumption

Ending stocks

• Extremely low ending stocks by the end of the year for both yellow and green
• Sharper drop in yellow ending stocks compared to last year but both will be very tight
• As percent of use, yellow ending stocks will be even tighter than for greens
• Leading to the current price environment

Prices

• Long-term prices for yellow peas in Western Canada: average bids are in the $15 price level
• Individual bids north of $16/bushel
• Record levels for yellow pea prices
• Like a number of other crops, farmers are not selling. Either they don’t have the products or they are watching and waiting
• Where will demand start to be rationed?
• For greens, prices are not at record levels of 2011/12 (close to $18/bushel) but momentum is heading towards there
• The situation is the same in the US, in fact posted bids are even higher

Main Takeaways

• Decent carry-over from last year, mostly greens
• 2021 crop is 2 million tonnes smaller and supplies are 1.75 million tonnes smaller than last year
• Less feed pea demand from China takes a little of the pressure off the market
• Shortfall in the US expected to be the key market driver. Trade patterns changing as a result; demand spilling over into Black Sea markets
• India not in the market but remains a possibility
• Record prices haven’t rationed demand yet
• Next year, lots of crops vying for acreage even with record prices for yellow peas. Record prices also for canola, durum, barley - looking like a strong market going into 2022
• Buyers expected to be more aggressive earlier but farmers will be reluctant to forward contract especially if the moisture situation doesn’t improve as we go into winter