Winnipeg | CNS Canada — Western Canada and the northern U.S. could be in trouble for next year’s durum crop if rain doesn’t come, while large global stockpiles could also keep commodity prices low, according to analysts here at the Grain World conference.
“Will it rain in the durum areas of Canada and the United States? Because if we have another year of drought, last year we rode on subsoil moisture, that’s what got us through. It’s not there this year,” Rhyl Doyle, director of export trading for Paterson Grain, said Wednesday while on the conference’s Future of Cereals panel.
This winter saw drought conditions throughout Saskatchewan, western North Dakota and Montana. After repetitive wet years producers were able to use subsoil moisture to pull off a decent crop, but heading into the next growing season that won’t be the case.
Canada grew 4.3 million tonnes of durum in 2017, according to the latest Statistics Canada estimates, down from the 7.8 million tonnes grown the previous year, and the five-year (2011-16) average of 5.9 million.
While Canadian durum supplies may be tight, large world stockpiles of wheat in general will put pressure on markets, according to Tom Ostby, manager of global wheat and barley research for Engelhart Commodities.
These stockpiles will hold prices “relatively low going into 2018 and 2019 for crops here in Canada,” he said.
Speculators are being very short in wheat futures markets, which could lead to volatility in the markets if we see production issues around the world, he said.
Canada is known as an exporter of protein, which can work in the country’s favour when other countries’ protein contents fall short.
“If we have high protein harden winter wheat crops and lots of protein around the world that’s bad for us,” Doyle said.
— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @AshleyMR1993 on Twitter.