Canada Markets

Disappointment with durum returns has led the recent Prospective Plantings Report in the United States to cut the intended area of U.S. durum plantings by 17.5% to 1.75 million acres in 2013. Losses in acreage by growing area are estimated at 240,000 acres in North Dakota (18%), 40,000 acres in Montana (7.7%), and 90,000 acres in the desert durum growing areas of Arizona and California (36.7%).

The attached chart shows the trend in seeded acreage in these growing areas since 2009, as well as the projected acres for 2013, as presented in the Prospective Plantings Report. As well, the seeded acres for Canadian durum over the same period are also included, which includes the most recent projection for durum acres for 2013/14 as indicated by Agriculture and Agri-Food Canada (AAFC).

The Dakota Gold newsletter from the North Dakota Wheat Commission has suggested that a $1 to $1.50/bu premium ($36.74/mt to $55.12/mt) over hard red spring wheat is generally required to entice growers to plant durum. This simply has not been the case this crop year, with statistics calculated by ProphetX indicating the DTN National Spring Wheat Index trading at an average premium of $.44/bu ($16.17/mt) over the DTN National Durum Index since the beginning of the 2012/13 crop year which began on August 1. The highest premium reached, durum over HRS, was 19 cents/bu, while the largest discount to spring wheat reached was $1.06/bu. Over the entire 2012/13 crop year, durum traded at a small premium to spring wheat over a 19-day period in the month of February.

The Dakota Gold newsletter projects production to potentially fall by 21% in 2013/14 in the U.S., while even with normal domestic demand and exports, should lead to a tightening of stocks from the projected 2012/13 carryout of 30 million bushels, or 816,460 mt.

There are additional supportive factors to watch in terms of the U.S. crop. One is the fact that the earliest durum harvest which starts in June in California and Arizona, may see the local feed markets as the most attractive market in which to move product, buoyed by high corn prices in the area. The second factor to watch is the delayed seeding in the northern states due to cold and wet weather, which could lead to a further drop in durum planting intentions.

Here in Canada, AAFC is factoring close to a 1% increase in durum acres for 2013/14 to 4.72 million acres. This is compared to one outlook from Grainworld in February suggesting an 8.5% decline in acres due to a lack of price signals. Statistics Canada will be releasing their first look at 2013 plantings in their March Intentions of Principal Field Crops report on April 24.

For all the same reasons as indicated above, Canadian producers could be inclined to reduce planting intentions, which could further tighten North American stocks and provide badly needed price support.

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

(AG)

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