February 17, 2022
Kira Nash spoke with Candy Willett from US-based Steele & Company about the US pulse market, export trends and demand, the removal of EU tariffs, and what 2022 has to offer.
Steele & Company was founded by the owner, Doug Steele, in 1994. Doug had been a part of the bean business prior to that, working at his father’s facility, so he's been in the bean business most of his adult life. I joined Steele & Company about 10 years ago and I’ve been in the business a little over 30 years. We deal in dried beans, peas, lentils, and chickpeas and I primarily deal with chickpeas, peas and lentils; I also do some of the dried bean varieties primarily out of Washington State and Idaho.
Yes, we source from all over the United States, a small quantity from Canada and some other countries too, but we primarily trade in US pulses. We source our chickpeas mostly out of Washington state and Idaho and a few from North Dakota. The logistics for export are very easy out of this area - or rather, they were very easy! But anyway, we’ve stuck at it out here and I’ve been working with some of these suppliers for 30 years. We have some very strong long-term relationships out here and we tend to support growers and processors that are not exporters themselves. So many processors are now exporting too, and we have a couple of really good partners; it’s worked well for them and for us for a number of years.
It is. It’s getting harder and harder for a trading company to source products from a processor that doesn't also export. But Michigan has some very long standing relationships. We also have some production of our own. So that's kind of what we try to stick to so that we can be competitive and offer good prices and good quality for our buyers.
The climate played a major role this year. Although acres were down somewhat in most of the pulses, it was really the weather that affected the yields overall. Chickpeas, for instance, were down overall across the United States about 30%. It was substantial. I think the areas in which we really saw a decrease were chickpeas, green peas, lentils, pinto beans, and black beans. North Dakota got hit pretty hard and that’s a huge production area so that plays a huge role in the current market situation.
When other commodity prices go up and make it more of an advantage for the grower to grow those crops rather than pulses, growers will choose those higher-priced commodities. If corn prices are higher and wheat prices are higher, that will influence how much is planted in terms of pulses. There are a number of commodities that we don't trade in but they still affect the acreage on the pulse crops, because growers need to get the best return on their investments.
Every time that you have a weather condition, or less acreage, it tends to drive prices up, which means growers get more money for their product and that makes it a more attractive product to plant. I expect we'll see an increase in acreage this year. I also suspect that, because of the current pricing level, we'll see a decrease in pricing. That never makes a grower happy! The investment is quite a bit for them and, even with crop insurance, if there’s a disaster they don't really recoup their money. So, it's a balancing act between growers getting paid enough that it pays for them to grow it and then the processor making their processing costs, and then those of us that sell their goods making a margin.
We also have to take the increased shipping costs into consideration. They’re really playing havoc with the market, because rates have tripled to some destinations. Sometimes more! It’s really the export markets that have taken a hit, because our prices get high and we’re not competitive with other origins.
I would say that when Covid hit, we saw an unprecedented rise in domestic demand. People were at home, they were stocking up on shelf-stable foods that they could prepare themselves, they weren’t going out to eat. They were also looking for healthy choices. And, of course, meat prices have gone up and, when people are home more, they learn to cook other things than what they're used to. We’ve had good demand domestically this year. I don't think it's at the level it was last year but it's still good, steady demand for black beans, pintos and kidney beans.
We haven't seen as much activity in our pinto exports but some of that is because of the situation in North Dakota and pinto prices for the US are also very high right now. And, of course, the quality in North Dakota suffered due to the severe drought and a lot of the markets that buy from the US want really good quality. So we have high prices and a less high-quality product to offer - that has had an effect and haven't necessarily seen as many pinto bean exports as we normally do for our company, but I can't say it’s the same for the whole pulse industry.
People who sell into Mexico have probably seen some good demand for both pintos and black beans. We aren't a big trader into that market so we're not necessarily seeing that.
We do pinto bean exports to the Dominican Republic and we've had some trouble due to prices being higher than the market there can bear and also because of the disruption in shipping. They’re working with import permits and it's a struggle to get things shipped during the import permit time. Right now it’s very difficult to guarantee an arrival day. So we have missed out on business there, both because of pricing and shipping problems.
Right now, it’s the worst it’s been. Partly due to a cumulative effect, but also because of the steamship lines. Most of those that went to Central and South America from the Port of Seattle have pulled out now, and we’re down to just one line: MSC. They have one vessel per month, and it feeds Central and South America and the EU. Shipments are anywhere from 1-4 months late because you can’t get the cargo there, there’s not enough space, they run out of equipment. Or they change the dates. We understand it, but it’s really been a challenge. But I have to say that the buyers on the receiving end have been really patient through everything. They know everyone’s trying and there just aren’t a lot of options. Our forerunners tell us this could last another year, but we’ve heard rumors that there might be more vessels come April. So we’re crossing our fingers and hoping for more options.
I think that tariffs coming off in the European Union will be a big boost to US dry beans in particular. The EU was a huge market for us, and a long-term market. When that tariff hit, it really hurt the bean business. There were trading partners that most of us have had for years and years, but there just aren’t that many buyers that can absorb a 25% tariff on beans. Buyers in the EU have always been quality-conscious and they would pay more for US pulses than for other origins because they knew that ours were good quality but you just can't add another 25% and expect them to absorb that. And, of course, our growers and processors can't lower their money by 25% either. So, I think the tariffs coming off has already opened up some more business. We've seen increased demand to the EU since that tariff announcement came; we hope that it continues to increase again and we get back to where we were.
We see a lot of demand for dark red kidney beans, navy beans, black beans, and pinto beans.
Well, we had such a small crop and our prices starting out this crop year were very high, so that really scared off a lot of buyers. They've softened somewhat but export for chickpeas has been a lot slower this year than normal. Pakistan, who's been a big buyer for the last several years has not really been doing much buying. India’s buying hasn’t been where it normally is. And even Spain, which is one of my bigger markets, has been pretty slow in buying this year. I think it's been a combination of pricing and the shipping issue. But, since the first of the year, I think I've seen more interest in US chickpeas than I had earlier in the crop year. We didn't have the forward sales that we normally have on the books for chickpeas this year but, on the other side of the coin, we've seen domestic demand pick up on chickpeas. So it always kind of balances out but we never like to lose our export markets.
I think — and I’m speaking for Washington and Idaho — some of the growers are always going to plant what they plant year after year, especially on chickpeas. They don't necessarily stop planting chickpeas because corn prices are higher; they will continue to plant their acres. This year, there wasn't necessarily a big reduction in chickpea acres in Washington and Idaho, but the yields were severely reduced due to the drought. It was just a very dry, hot growing season. But, we’ve had a lot of good moisture out here already through the fall season going into January, which we hope will put the ground moisture back in there so then when it's time for planting, growers will be encouraged to plant.
I'm already getting inquiries for next year's crop, which won't be planted for quite a while. That's a good sign to me that people are already showing interest in buying US pulses for the 2022 crop year. I’m also hopeful that, even if the shipping problem isn't resolved, it will get better. We’re all just prepared to manage it better. This business is full of adversity but it's also full of people who take that adversity and learn from it and try to find a different way to do things so we can carry on and keep business going.
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Candy Willett / Steele & Company / US / Canada / Mexico / EU / Dominican Republic / MSC / North Dakota / Washington / Idaho / pinto beans / black beans / dark red kidney beans / navy beans
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