Chart analysis and commentary by Harold AGJ Davis Laird Lentils: Boxed in for awhile?   In the wake of this summer’s sharp price retreat, the chart for Laird Lentil average elevator prices shows multiple zones of support and resistance that are likely to dominate trading in the months ahead.    For example, after steep falls there is a tendency for prices to bounce or experience retracement. In this context, Lairds could attempt a rally, but near term prospects could be limited by the observed importance of the 30-32 cent/lb area. As well, there are probably lots of potential sellers that would now welcome another opportunity to sell the 35 cent level, and some could even reduce their expectations further to the lower level.   Conversely, it is equally true that dips towards or below 25 cents seem to encounter solid buying nd prices quickly stabilize.   With battle lines clearly formed, back and forth price action might trace out a 5-7 cent/lb box for the time being. Privacy Policy    Information is secured from sources believed to be reliable, but 100% accuracy cannot be guaranteed. For analytical purposes, some price data for illiquid markets may be  interpolated.    Persons associated with Canadagrain.com deal commercially with businesses active in Prairie grain markets and may hold positions on their own accounts in commodities discussed herein.    Prairie Crop Charts does not provide specific marketing advice or advice on trading opinions on futures and option contracts. Canadagrain.com, 958 – 167 Lombard Ave., Winnipeg, MB R3B 0V3, tel: (204) 942-1459  fax: (204) 942-7652 Site design & maintenance by Branscombe Consulting Copyright 2012 Canadagrain Copyright 2012 Canadagrain.com Reproduction and/or redistribution without permission are prohibited. Mobile Chart analysis and commentary by Harold AGJ Davis Peas: Price relationships vary over time   Sometimes pea prices appear to move in close step while other periods show significant variation. For example, since June 2010, Green and Yellow prices have moved back into line following two prior years of major differences. These days, Feed Peas seem to have wandered off and not kept pace. In a period of global recession, this leaves Feed Peas looking comparatively cheap and some poorer countries might be tempted. Navy and Pinto Beans: Big rises often linger on    The type of supply/demand dynamic that causes meteoric rises is rarely over too quickly, nor is it undone in a hurry. Prices tend to linger in the high ground for awhile until the supply/demand balance evolves enough to dampen volatility. In the case of a specialty crop, this can often require another crop year.    For example, note that the late 2007-2008 bull market was followed by swinging sideways action extending far into 2009. This is particularly easy to see in the price of Pintos.    Currently, the truly impressive 2011 advance in Navies and Pintos seems to have stalled out, and tops may have been put in place. However, if the past is any guide to the future, above average prices could linger far into 2012. Chart analysis and commentary by Harold AGJ Davis Chart analysis and commentary by Harold AGJ Davis Yellow Peas: A retreat from rich pricing   In recent days, average delivered elevator prices for Yellow Peas have broken the psychologically important $8/bu average price support level. This suggests the potential for discouragement and some further price weakness.   The drop in Yellow Pea prices seems to reflect generalized softness among the commodities that share similar price behaviours. Yellow Peas had been holding up well compared to Corn and Feed Wheat, and Yellows were beginning to look comparatively expensive.   Value ratios suggest that Yellow Peas could even be marked down some more, and this would be consistent with deteriorating sentiment. However, it is probably too late to become truly negative given that the bear market in Corn is already very old and when both Feed Wheat and Corn are holding above their respective support zones.   Therefore, the downside potential in Yellow Peas might be limited to the $7/bu average price area. Chart analysis and commentary by Harold AGJ Davis Crimson Lentils: Dare we hope?   The bear market in Crimsons delivered elevator prices has had a speed change, and that is noteworthy. For most of the past nine months, Crimson Lentils have been slumping along a curved trend that probably summarized a set of generous supply factors that are now fading in importance. For instance, recent comments out of India suggest Lentil acreage shrinkage in this winter’s Rabi crop. So, the situation in Crimson Lentils may have begun its transition from abundance towards a balance in supply/demand. How quickly could prices recover?   The nearby downtrend is still intact and, therefore, Crimsons are still officially in a bear market. And what a bear it has been. The long term chart of Crimson Lentils shows a relentless downtrend that can be traced all the way back to 2008. In a world of higher average agricultural prices, nobody is going to plant a loser like Crimson Lentils in 2012. However, in charting, it is thought that the bigger the trend that is broken, then the bigger the price reaction.   This could make Crimson Lentils the Cinderella of the 2012/13 marketing year.   Chart analysis and commentary by Harold AGJ Davis Feed Peas: How long can they ignore Corn?   Since the bull market began in the summer of 2010, Saskatchewan FOB Feed Pea prices have not kept pace with CBOT Corn futures expressed in Canadian dollars. To a certain extent, this may reflect the notion that Corn’s advance was driven by the economics of ethanol, not feed.     However, given time, the value relationship will revert to normal. Acreage shifts in favour of highly profitable Corn might come at the expense of other crops. The impact might be felt far beyond the Corn Belt because of a “knock-on effect” influencing all other decisions. So, supplies of other crops, like Peas, could eventually contract.   From a demand perspective, feeders look at the relative prices of competing ration ingredients and will, within limits, adjust the usage of cheap and nutritious components. Given that Feed Peas are trading at only 87% of the value of Corn, they are a bargain and Feed Pea consumption could increase.   Taken together, these factors should produce relatively higher Feed Pea prices again. Feed Peas are already trading up  in some locations and the average FOB Farm price could easily be pulled to the $6/bu level. This “big round number” might function as resistance for awhile, but the long term adjustment process is capable of driving the Feed Pea/Corn ratio much higher and this could eventually cause Feed Peas to extend their bull market. Chart analysis and commentary by Harold AGJ Davis Lentils: Crimson’s contagion   In recent days, Laird Lentil prices have broken below support  and Estons seem ready to follow suit.   For months, the large spread between weak Crimson Lentil average elevator prices and the higher prices for Lairds and Estons have posed two questions: Would Crimson’s relatively lower price encourage rapid consumption, faster disappearance and eventual Crimson price improvement? Or would the abundance of low priced Crimsons make them the cheap alternative and siphon demand away from Lairds and other green varieties causing their prices to retreat? We now seem to have an answer. Historically, Lairds and Estons have no special claim to price superiority. Sometimes they are below Crimsons, and sometimes above. However, there is a chart argument that Laird Lentils usually trade at premium to Estons and, therefore, Estons may follow Lairds lower.   Looking far forward, Crimson Lentils may be the only foodstuff in the world that have been in a downtrend since 2008, a simple truth that is likely to reduce 2012 acreage prospects. Now, if Lairds and Estons begin to show sympathetic weakness, their planting prospects will shrink too.   As they say, the cure for low prices is low prices. Chart analysis and commentary by Harold AGJ Davis Green Peas: Returning to normal   In recent months, Green Peas have remained firm and held above their uptrend line while many other commodities have been soft. This contrast has made Green Peas look like a champion, but the comparison to Corn, the North American yardstick, suggests that Green Pea prices are simply returning toward a more normal relative value relationship after a period of sharp distortion.