Durum Stocks Forecast to Remain Historically Tight
There's a large number of moving parts involved in forecasting both supply and demand factors in forward positions. Good examples are the forecast for wheat exports in the current crop year, where the export demand estimate released by Agriculture and Agri-Food Canada was reported as high as 19.2 million metric tons in September, while this estimate has been reduced in six of the seven months since, most recently estimated at 18 mmt, which still seems high and likely to face further downward revisions.
This month's estimates included an upward revision in durum exports for 2020-21 to 4.9 mmt, up 100,000 metric tons and would be the highest volume exported in six years.
The result of this 100,000-mt increase in forecast exports is a corresponding drop in forecast ending stocks to 900,000 mt, equal to the current forecast for 2019-20. This is shown by the green bars on the attached crop year. This is a historical tight level of stocks, down 49% from the previous 20-year average (1999-00 to 2018-19) as seen on the attached chart of Statistics Canada data going back to 1981. Stocks fell below 1 mmt only seven times over the period, while the last time Statistics Canada data shows back-to-back stocks below 1 mmt was seen in the 1984-85 and 1985-86 crop years.
The last five years where a sub-1 mmt ending stocks figure was reported for Canadian durum, which includes 1985-86, 1988-89, 1997-98, 2007-08 and 2014-15, the following year would result in a surge in ending stocks. This ranged from a 12.7% increase in 2014-15 to a 192.4% increase in 1985-86, while averaging a 114% increase across the five crop years.
AAFC's ending stocks estimate is left unchanged at 900,000 mt despite an estimated 15% increase in seeded acres, a 2% hike in harvested acres and a modest 0.8% increase in yield forecast for the crop year ahead.
While Canada's stocks are forecast to remain steady over the crop year ahead, AAFC reports that global stocks are forecast to contract by 400,000 mt to 7.1 mmt, quoting International Grains Council data, which represents 19.6% of global use.
Cliff Jamieson can be reached at email@example.com
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