China turns to Canadian peas amid soybean standoff

Chinese feed manufacturers are increasingly purchasing Canadian peas as an alternative supply to soymeal from US soybeans when sourcing feedstock for animal feed, according to government data and market sources in China and Canada.

Chinese imports of peas in the first nine months of the year have reached 1.3 million mt, 170,000 mt more than in the whole of 2017, according to both Chinese and Canadian government statistics, and market sources say there are several hundred thousand more tonnes contracted for delivery in Q4.

Traders in Canada told Agricensus that at least three cargoes left for China last month and were purchased by Chinese feed manufacturers at a price of around $270/mt delivered into southern China, while bids and offers were heard at $260-300/mt.

“This is the normal price level," one Canadian exporter said.

India typically takes 1.3 million mt of Canadian peas a year, but since slapping a 50% import tax on peas this year, exports from Canada to India have fallen to just 90,000 mt,

While pea production in Canada has fallen 400,000 mt to 3.7 million this year compared to last, exporters are desperately seeking new markets as stocks have swollen 561,000 mt to 876,000 mt by the start of July due to the Indian import tax.

And since China has slapped a tax on US soybeans, Chinese feed manufacturers have been seeking alternative protein supply, leading to greater demand.

“Pea protein is lower than soymeal, but it is higher in energy, although not as high in energy as corn. I expect that two-thirds of the peas are to replace corn in feed and one-third is to replace soymeal,” one analyst at an agricultural trading house in Shanghai told Agricensus.

Chinese feed manufacturers have also purchased about 600,000 mt of Ukrainian sunmeal to replace soybean in the northern hemisphere winter as Chinese crushers try to find non-US supply and run down stocks until the Brazil harvest starts in late January.