Canada Markets

The most recent Canadian durum supply and demand tables would indicate Canada supplying 58% of the 2012/13 global durum trade. The International Grains Council has forecast global trade at 7.076 million metric tonnes, down from last year's 7.484 mmt, while Canadian exports are forecast at 4.1 mmt, as of the December Canada: Outlook for Principal Field Crops report. This export projection has been increased from last month, based on a 229,000 mt increase in production, as seen in the Dec. 6 Statistics Canada production report.

Of the IGC's projection for 7.076 mmt to be traded globally this year, 41% or 2.9 mmt will move into North Africa, while 27% is forecast to move into the European Union. As of the end of October, Statistics Canada data indicated movement into Western Europe at 472,896 mt, 28% higher than the first three months in 2011. Sales into North Africa totaled 516,759 mt, or 845% higher than last year's 54,650 mt sold into this area in the first three months of the crop year in 2011.

The significance of this is that with sales potential being so concentrated into certain regions of the world, price potential will be totally dependent on the presence (or absence) of these buying nations within the marketplace. Unfortunately, it's the ongoing absence of significant buying activity that is keeping the market quiet and moving sideways during the past months.

The increase in Canada's projected exports, which is 14% larger than last year, is largely because of production deficiencies in growing regions such as the EU, Morocco, Kazakhstan and Australia. As a result, carryout stocks are forecast to be 1.3 mmt, 14.4% below last year.

At this point, there is no change in projected prices from last year's prices. For example, the final 11/12 pool return as announced by the CWB is $355 for 1 CWAD 13% protein. To date, the Nov. 30 Harvest Pool announced a PRO of $356/mt, only a dollar higher, while the most recent announcement of a Winter Pool, which focuses on potential in the last half of the crop year, came out with a PRO of $355/mt, in-store Vancouver or Thunder Bay.

One factor I watch is the pace at which the CWB prices grain in its pools. As of their Nov. 30 report, it had only priced approximately 35% of its Harvest Pool, a sign that the board is watching and waiting for the market activity to increase.

As far as the pace at which Canada has moved grain to date, total disappearance (exports and domestic use) is forecast to be 2.139 mmt as of week 19. Visible stocks within licensed facilities are reported at .852 mmt, suggesting that 48.5% of total estimated supplies have been exported, used domestically or are accounted for in facilities. As of week 19, Canadian disappearance is at 34.1% ahead of last year's disappearance, while 41.3% ahead of the 2009-2011 average. As of Dec. 6, commercial sales out of the U.S., as reported by the U.S. Wheat Associates, were 12.6% behind last year's pace.

Moving forward, concerns about the U.S. Midwest drought, which has crept north to southern North Dakota, which is by far the largest durum-growing State, along with tightening stocks in Canada, should act to support Canadian prices. Also of interest is Informa's report today suggesting that North Dakota will substantially increase corn plantings this year, from 3.6 to 4.3 million acres. Could this be at the expense of wheat and durum acres?

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

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