Prairie durum market grows quiet

The durum market in Western Canada is quiet for the time being, with buyers and sellers both backing away after seeing steady movement earlier in the fall.

"We’ve been busy buying up until this point, and now things have quieted down," said Warren Mareschal, sales manager with South West Terminal near Gull Lake, Sask. End-use customers are also backing away, he added.

Canada has exported 1.2 million tonnes of durum in the 2012-13 crop year to date, according to the latest Canadian Grain Commission data. That compares with 800,000 tonnes at the same point the previous year.

Domestic disappearance, at 461,500 tonnes, is also ahead of the 172,900 tonnes seen during the first three months of the 2011-12 crop year.

Farmers have moved enough grain for the time being, with any future sales likely deferred into the new year, Mareschal said.

Spot bids for durum in southern Saskatchewan can currently be found around $8.30 per bushel, he said, with more deferred prices for a few months out only slightly higher — coming in near $8.42.

That spread was considerably wider earlier in the fall, and the narrowing in was an indicator of the lessening demand, said Mareschal.

He expected end-users would eventually need more coverage for the May-June delivery timeframe, but that demand has not yet made its way into the market. Farmers have priced about a third of the durum production to date, Mareschal estimated.

With CWB, the former Canadian Wheat Board, no longer the sole marketer of Prairie durum, Mareschal said one interesting development in the market was the fact that there are now opportunities to sell lower-quality product at No. 1 CWAD values.

"Buyers are looking at taking a lower-quality (durum) as long as it falls under certain specs," he said.

However, while those opportunities are there, he also estimated that up to 85 per cent of the durum grown in southern Saskatchewan hit No. 1 specs in 2012.

– Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.