Burdensome supplies to keep durum prices under pressure

CNS Canada –– Canadian cash prices for durum have been weak all winter, as logistics issues in Western Canada have kept large supplies of the crop from moving. Going forward, the burdensome supply situation is expected to keep values under pressure.

“Companies are still cleaning up sales that they’ve made earlier, and this will take until August or September,” said Jerry Klassen of GAP Grains and Produits in Winnipeg.

As a result of being behind on sales, grain companies won’t be able to booking anything new until well into the new crop year, which will keep cash prices from seeing much movement, he said.

“The sales program for Canada is basically on the books until August, so you’re not going to see any change in prices in the interior,” he added.

Western Canadian cash prices for old-crop durum ranged from C$4.50 to $5.00 per bushel on Monday, steady compared to a month ago and down more than $3/bu. compared to a year ago, Prairie Ag Hotwire data shows. New-crop values range from $4.60 to $5.30/bu.

Canada produced 6.5 million tonnes of durum in 2013-14, up from the 4.6 million produced in 2012-13, Statistics Canada data shows.

Logistics problems that were caused by other very large crops and unfavourable weather this winter will result in very large carryout stocks. This will create a burdensome supply situation heading into the new crop year, which begins Aug. 1.

Agriculture and Agri-Food Canada expects 2.3 million tonnes of durum will be carried forward from 2013-14, from just 1.15 million tonnes in 2012-13, according to their March supply and demand report.

Acreage is expected to see a decline compared to last year, with AAFC estimating durum area for 2014-15 will total 4.67 million acres, down from 4.96 million seeded last spring.

But even if lower acres meet average yields this growing season, the supply situation will still be very large, and bearish for prices going forward.

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

 

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