CNS Canada — Canada’s durum prices are losing their premium over other wheat markets, but staying relatively static, despite hearty harvests and lagging demand, one analyst said.
“I think what will drive the durum market here now is the overall wheat complex,” said Jerry Klassen, manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits.
Durum’s premium over spring wheat will likely narrow going forward, as global wheat markets build in a risk premium.
“That’s probably going to be more of an influence on durum than the actual durum situation itself,” Klassen said.
New-crop prices are stagnant, he said, while old-crop prices are under slight pressure.
New-crop bids range from $6.02 to $6.42 per bushel in Alberta and Saskatchewan, while delivered elevator durum prices are between $6.87 and $7.66 in those provinces, according to Prairie Ag Hotwire.
“If the market is well-supplied you don’t really see any active price movement, or major price activity,” Klassen said.
Despite those stagnant prices, global durum production is active as harvest nears in Europe and Mexico.
“And at the same time we’re looking at North American seeding acreage intentions,” Klassen said.
Canadian farmers are expected to seed 5.9 million acres of durum this season, according to early estimates from Agriculture and Agri-Food Canada.
The bulk of Europe’s durum harvest takes place in June, Klassen said, adding that the region’s crop is shaping-up well, with bigger crops expected from both Italy and France.
“Right now it’s a critical time for that crop for final quality and yield development.”
Growing conditions in Mexico are also favourable, and yield development in the country is healthy.
The strengthening Canadian dollar is also keeping some pressure on prices.
“The demand so far this crop year hasn’t been very good; we’re lagging marginally on exports compared to last year,” Klassen said.
He expected Canada’s export pace to subside further in the final three months of the crop year, due to harvest in competing regions.
Canadian durum exports as of March 13 were at about three million tonnes, compared with 3.4 million the prior year, according to data from the Canadian Grain Commission.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.