Western Canadian durum prices are expected to stay steady in the new crop year and continue to hold a premium over spring wheat. The expected tight supply situation should help to keep a firm floor under the market.
“We’re probably going to hold on to durum prices where they are today, maybe a little bit lower,” said Charlie Pearson, market analyst with Alberta Agriculture and Rural Development in Edmonton.
According to Prairie Ag Hotwire, old-crop durum prices across Western Canada ranged from $7.80 to $8.14 per bushel, while new-crop values were around $7.26 to $7.90 per bushel on Thursday.
The tight Canadian supply outlook for both 2012-13 and 2013-14 should help to underpin the market, Pearson said.
Exports in 2012-13 have been very strong so far, which is accounting for some of the supply tightness. According to Agriculture and Agri-Food Canada, 2012-13 durum exports are expected to be up 26 per cent compared to 2011-12 because of production problems in Europe, Morocco and elsewhere.
The government agency pegged 2012-13 carryout stocks at 1.1 million tonnes, which compares with 1.49 million in 2011-12.
Ending stocks in 2013-14 are expected to be up slightly from 2012-13, at 1.2 million tonnes, but that’s still on the tight side, Pearson said.
Though farmers in Western Canada originally intended to seed more acres this spring, some of them may not get seeded due to the late spring.
The late seeding could also hurt yields and puts crops at more risk of frost damage later in the growing season.
“Even with some good conditions here in Canada and a little bit of optimism, we recognize the fact that we’re probably going to lose a few acres,” said Pearson. “And even with a little bit of optimism on yields, we’re still probably relatively tight here in Canada.”
Supplies are also expected to be tight in the U.S. and Europe this year, which should help to underpin the market, Pearson said. Canada, the U.S. and Europe are the top three durum exporters in the world.
However, North Africa, one of Canada’s biggest durum buyers, may not need to import as much this year, which is why prices are expected to stay steady and not move higher, Pearson said. He noted North Africa imports nearly 50 per cent of all durum.
But the direction of prices will also weigh heavily on what happens with the weather in Canada throughout the growing season.
Since Canada is the No. 1 exporter of durum in the world, Canadian weather has a big impact on the world market, Pearson said.
Pearson noted Canada exports about 60 per cent of the world’s durum supplies, but the country’s market share is probably bigger because it also supplies the other two large exporters, Europe and the U.S., with durum.
“They (Europe and the U.S.) produce durum, but they buy Canada’s high quality durum and then they export their mid-quality or lower quality durum,” he said.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.