Durum markets reckon with weather

'There was no wiggle room for a crop problem'

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MarketsFarm — The higher temperatures soared and the longer between rains in Western Canada, the lower the yield projections for most crops — and drought-tolerant durum wheat is no exception.

With bids already elevated due to a downturn in potential new-crop supply, the price of durum could rise even higher.

“There’s not a lot of trade going on — cash trade, that is,” MarketsFarm expert Bruce Burnett said. “Farmers really aren’t selling any durum past what they’ve already committed. Buyers still aren’t really posting bids it would take to make those trades. It’s a bit of a détente.”

Durum production in Canada is expected to total 5.835 million tonnes for the 2021-22 crop year, according to Agriculture and Agri-Food Canada’s (AAFC) latest monthly crop estimates released Tuesday.

AAFC downgraded its estimate for durum by 2.9 per cent from the 6.01 million tonnes it predicted in June. In total, 6.571 million tonnes were produced during the 2020-21 crop year — meaning if estimates hold, durum is set for an 11.2 per cent year-over-year decline.

The high-delivered bid for durum in Alberta was $9.78 per bushel, 99 cents higher than last month, according to Prairie Ag Hotwire data from Tuesday. In Saskatchewan, the price was $10.96/bu., up $2.12 on the month.

Burnett added there will be additional demand for North American durum from the Mediterranean, but Morocco’s durum harvest is sufficient not to warrant additional imports.

Jerry Klassen, a Winnipeg-based independent trader, added that France’s harvest is lagging last year’s due to heavy rains and much of the demand for Canadian durum will come from the U.S. and France.

“There was no wiggle room for a crop problem and now we do have a crop problem,” he said. “So we’re going to have historically tight stocks for two years in a row. Next spring, the market will need to encourage acreage.”

Klassen believes that the worst of the heat is over and good durum crop conditions in Saskatchewan will cause a standstill in prices. However, Burnett thinks traders will play the long game before prices are settled.

“I think everybody’s just waiting to see what the quality and quantity of this year’s durum harvest is before we see the price situation get clarified dramatically,” he said.

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.



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