CNS Canada — Prices for durum in the Prairie cash market have been on the rise recently, but there are very few actual transactions being made as farmers aren’t selling.
“The companies know that, generally speaking, farmers aren’t in the mood to sell, so they’re probably trying to maybe encourage deliveries of last year’s durum, so trying to get that out of the bins, which might be hard,” said Neil Townsend, director of market research services with CWB in Winnipeg.
Cash prices for durum in Saskatchewan and Alberta gained between $20 and $37 per tonne during the week ended July 10, to range from $310 to $343 per tonne, according to data collected from a number of delivery points in Western Canada.
Some buyers are also looking to lock in some new-crop contracts for high-quality durum, due to poor-quality crops out of Europe and Canada last year.
Farmers, however, are still waiting for the market to move higher as drought continues to plague many growing regions in Alberta and Saskatchewan.
While recent market strength is mostly linked to the problems in Western Canada, European crops are also running into weather issues, Townsend said.
“It’s not to the same scale or scope as what Canada has, but it has faced a little bit of weather-based adversity. The Italian crop went down a little bit,” he added. “They had a very tough crop last year, so this is probably almost more of a residual impact from that.”
While Canada’s durum crop also had a tough year in 2014 due to rains at harvest, it’s looking like quality will improve this year.
“I think you generally would say there’s a correlation between a drier, hotter, smaller crop and better quality. But that being said, the quality is not going to be totally set,” Townsend said.
A number of weather events, including rain at harvest time, too much heat or cool temperatures could all still lower the quality of the crop, he added.
While Townsend expects this year’s quality to be better than last year, the same can’t be said for production, as drought reduces yield prospects.
CWB’s current estimate calls for four million tonnes of durum production in 2015-16, which would be down from last year’s 5.2 million, despite area increasing by a million acres this spring.
“It’s also down from last week, and with the weather conditions that are currently in place we’ll probably be taking it down a little bit next week as well,” Townsend said.
Assuming the hot weather pattern stays in place over durum-growing areas, he said, CWB puts the possible low end of its durum crop estimate in a range around 3.5 million tonnes.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.