Jerry Klassen of Winnipeg-based Resilient Commodity Analysis said conditions so far have been optimal for the wheat variety and if all goes well, above-average yields could be on the horizon.

“We’ve had significant rains in western Saskatchewan through the growing season. Seeding was a little bit delayed in some areas, but for the most part, the crop is off to a great start,” he said.

However, Klassen recalled that last year’s crop was also off to a great start before dryness and drought conditions reigned supreme from mid-June to the end of the growing season.

“That resulted in lower yields. Right now, I would say the crop is just about the same or a little bit better at this time,” he said. “This year, it looks like the forecast calls for regular rains in the durum areas and we’re not expected to see the extreme heat like we had last year in the summer.”

Klassen estimated that six million acres of durum wheat were seeded this year across Canada with expected production at approximately 7.5 million tonnes. In Agriculture and Agri-Food Canada’s (AAFC) monthly principal field crops outlook released on June 20, the agency estimated 6.343 million acres with production at 5.655 million tonnes. Statistics Canada (StatCan) will release their latest acreage estimates on June 27.

Canadian Western Amber Durum (CWAD) prices in Western Canada as of June 21 ranged from C$349.87 to C$366.48 per tonne (C$9.52 to C$9.97 per bushel) according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes).

As durum growers are usually reluctant to forward-sell, according to Klassen, prices in Canada are now at a similar level to those in Europe.

“What we’re seeing here is a relatively bigger crop developing in Turkey than last year. So we’re expecting an increase in Turkish exports and that harvest is going to move into full swing here in July,” he said, adding that the durum harvest is also expected next month in southern France and Spain.

Areas that have already begun their harvest are so far reporting good quality with slightly below-average yields.

“What’s happened is not (so much) Canadian farmer selling, but we’re seeing farm selling from other areas in Turkey and also in Europe … There’s significant harvest pressure in the durum market now. Canadian durum values probably are a little bit overvalued yet compared to where we could see prices a month from now.”

Klassen expects prices to stay put and then decline as growers jump at the chance to convert their durum crop into cash flow.

“The Canadian market will likely stay flat for the next three to four weeks and then maybe come under a little bit of pressure at harvest yet, but we’re not expecting a rally until probably next spring when the market starts to factor in lower acreage in Canada and the United States,” he said.

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“The only one that’s not selling aggressively is Canada, and we’re losing market share, big time,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP SA Grains and Produits.

European farmers are about 50 to 60 per cent finished harvesting durum, Klassen said, which is putting a damper on prices, as the region’s producers offer lower values.

“The French farmer is selling, the Italian farmer is selling,” he said. “We’re seeing a lot more durum come on the market from Europe.”

Despite heavy rains in France, crop quality is better than expected, Klassen said.

Cool, rainy weather delayed maturity during the growing season, which caused harvest to occur later than normal.

U.S. producers are also putting forward aggressive offers as the market gets a better handle on the size of North American crops, Klassen said.

“I think we’ve had some very good rains, there are still some quality concerns about the upcoming crop, but I think people are very comfortable with the yield potential,” he said.

Canadian elevator bids have dropped, but export offers haven’t changed much, with only minimal bids emerging from the country, Klassen said.

“There’s business going on in the market, and Canada’s not getting the business.”

Delivered elevator durum is between $6.59 and $7.35 per bushel in Western Canada, while new-crop prices are about $6.57 to $7.20, according to data from Prairie Ag Hotwire.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“It’s a very unique situation because we’ve got bigger crops coming,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP SA Grains and Produits.

France, Italy and the U.S. are expected to produce larger crops this year, but even with that pressure looming, the market has stayed quiet, Klassen said.

Old-crop stocks are relatively low quality, he noted, which means the market is at a standstill until trade starts from Canadian and U.S. producers.

Analysts had also anticipated new-crop French and Spanish durum would be on the market by now, but that hasn’t happened.

Italy has been putting out small offers, Klassen said, but still, the market is hard to define due to limited activity.

End users are carrying sufficient stocks for the time being, he added, which is keeping prices at a standstill.

Delivered elevator durum prices are about $7.43-$8.07 per bushel in Saskatchewan and Alberta, while new-crop prices in the same two provinces are about $7.10-$7.77, according to data from Prairie Ag Hotwire.

Exports are down on the year for two main reasons, Klassen said. Bigger crops in competing growing regions mean less room for Canadian product, while last year’s exports were above-average.

Durum exports as of May 29 were at 3.9 million tonnes, compared with 4.2 million tonnes in the same time frame a year prior, 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.

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The durum market is being weighed on by larger-than-expected producer deliveries throughout January, said Jerry Klassen, manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits.

“I think the million-dollar question is ‘At what price does the farmer start to slow down on his sales?'”

One reason for increased selling is volatility in the Canadian dollar.

“The weaker Canadian dollar has been supportive to the cash market, but the world market appears to be softening,” Klassen said.

The durum market also has a soft tone due to slightly larger carryout for major exporters, and similar production expectations next year in the U.S., Canada and Europe, Klassen added.

Despite heightened farmer selling, Canadian durum exports are behind last year’s pace, at 2.1 million tonnes as of Jan. 17 compared with 2.6 million tonnes in the same time frame a year prior, according to Canadian Grain Statistics Weekly.

“Canadian durum exports are lagging last year, sharply,” Klassen said.

Looking forward, analysts are watching North African tenders for price indications.

Dryness in North Africa is providing some psychological support, Klassen said, but that could be limited.

While the region will likely put out tenders for more durum throughout February, the idea is that they will be weaker than in January.

“Over the last four tenders each one is a bit lower. It seems like companies are getting a bit more aggressive on each subsequent tender.”

Delivered elevator durum in Saskatchewan will bring producers about $7.88-$8.82 per bushel, and about $8.34-$8.83 in Alberta, according to Prairie Ag Hotwire.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“I think the trade was anticipating this number for a long time,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP SA Grains and Produits.

In its December projection, Statistics Canada revised durum production upward to 5.4 million tonnes, compared with the 4.7 million estimated in October.

That figure also outstrips 2014’s production of 5.2 million tonnes.

“Buyers have other issues to deal with,” Klassen said. “It’s kind of the tail end of a period here.”

Buyers are concerned with limited tenders from North Africa and a quiet market in Europe.

Processors are experiencing a significant slowdown in demand and the inability to sell semolina, a coarse durum-based flour, Klassen added.

“That has really negatively affected the durum market,” he said. “And with the larger production it seems like the market is just at a standstill right now.”

But a weaker Canadian dollar has been supportive for durum prices, despite the slow market and limited demand.

“I think right now it’s five months until we start to see some new crop from the Mediterranean and Mexico.”

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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