According to DTN's cash index of United States durum bids, the index crossed the $6 USD level for the first time on Oct. 22, closing at $6.03/bushel after a steady rise since Sept. 9. This particular chart shows we haven't seen a rise such as this since the move from April to August in 2017 when this index rallied $3.13/bushel from $5.13 to $8.26/bu. DTN reports cash bids in North Dakota as high as $7/bushel on Wednesday.
The National Durum Index/National Spring Wheat Index spread is reported at $0.96/bushel on Tuesday, the widest this spread has been reported since August 2017. Nearby resistance is seen at 2016/2017 highs ranging from $1.54/bu. to $1.64/bu. on this chart. Over the last three Canadian crop years (Aug.1 to July 31) this spread has averaged a mere $0.14/bu. USD, ranging from minus $0.51/bu. to a positive $0.67/bu. spread in U.S. currency.
Forecasting a top could prove challenging given the uncertainty surrounding production, quality and exportable supplies. This month, Agriculture and Agri-Food Canada increased its estimated producer returns for Prairies producers by $5/metric ton to a range of $240 to $270/metric ton ($6.53 to $7.35/bu.), well above their average estimate of $235/mt in 2018-19. On Oct. 23, pdqinfo.ca is reporting a cash bid of $276.60/mt in southern Alberta, $267.02/mt in southwest Saskatchewan and $280.55/mt in southeast Saskatchewan, already averaging higher than the upper-end of AAFC's range.
AAFC's most recent estimates have pegged 2019-20 stocks at 1 million metric tons, which would be the lowest in five years. AAFC's stocks/use ratio is calculated at 17.5% for 2019-20, down from 30.4% in 2018-19. While leaving Canada's export potential unchanged at 4.7 mmt this month, AAFC increased their estimate for feed, waste and dockage by a modest 150,000 mt to 579,000 mt, close to unchanged from 2018-19. In 2016-17, this volume is estimated at 2.1 mmt, likely the end result of adjustments made to correct previous estimates.
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Cliff Jamieson can be reached at email@example.com
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