Canada Markets

Week 14 Canadian Grain Commission data shows 61,100 metric tons of durum exported, down sharply from the week prior and below the previous four-week moving average. Movement over this week was below the steady pace needed to reach the current AAFC target of 4.6 million metric tons, which may be possibly revised in this month's report, that may be released this week. In total, movement has only met the weekly volume needed to stay on track in three of the 14 shipping weeks.

In total, a cumulative 1.0367 mmt is 16.9% higher than the same week in 2016/17, as seen on the attached chart, while is 10.8% behind the five-year average for this week. The cumulative volume moved is roughly 202,000 mt behind the steady pace needed to reach the current crop year target of 4.6 mmt. Perhaps another way of looking at this is to consider historical shipments as of this point in time. Over the past five years, an average of 24.6% of total crop year exports have been realized as of week 14, which would translate to roughly 4.2 mmt this crop year, or 400,000 mt below the current export target set by Agriculture and Agri-Food Canada.

Producers have delivered 912,400 mt of durum into licensed channels as of week 14, down 28.9% from the five-year average for this period. This can partially be explained by the smaller crop, which is estimated at 4.299 mmt as compared to the 7.762 mmt crop produced the year prior. At the same time, a total of 17.3% of producer supplies have been delivered, defined as the sum of beginning stocks on farm plus total production, which compares to the five-year average of 21% of producer supplies delivered in the first 14 weeks or 27% of the crop year.

A look at pdqinfo.ca durum bids, as of Nov. 13, point to only a weak carry in the market, with the Southern Alberta bid showing a $5.43/mt spread between the current No. 1 CWAD 13% protein bid of $276.98/mt or $7.54/bushel between now and the deferred bid for May delivery. In southwest Saskatchewan, this spread is shown at $3.01/mt while in southeast Saskatchewan the spread between spot and the December delivery bid is indicated at $.69/mt, with the December price of $281.91/mt or $7.67/bu. trading higher than deferred months through June.

The current market structure as shown by these prices is providing little or no incentive to store durum, but the situation is clouded with issues of price transparency. As one producer put it, grain companies are making the bulk of their purchases on specials or by offering premiums or incentives, perhaps leaving little faith in posted bids at any given time.

Most recent export prices for durum reported by the European Union FOB the St Lawrence point to a continued grind lower. As of Nov. 8, this price is shown at $290/mt USD, down from a crop year high of $355/mt reported in mid-August. This is the lowest price indicated since June when price was indicated at $255/mt. Over the past three years, the E.U. reports the FOB St. Lawrence price averaging $381.67/mt for the same week. Over these three years, this same week's reported export price FOB the St Lawrence was the highest seen over the balance of the crop year, or very close to it.

The near-inversion in prices seen in southeast Saskatchewan is likely tied to United States movement that bears watching. The Canadian Grain Commission's Exports of Canadian Grain and Wheat Flour report indicates 81,100 mt shipped to the U.S. in the first two months of the crop year (August-to-September), which compares to last year's 6,500 mt over the same period. The latest USDA WASDE report increased the forecast for U.S. imports of durum slightly to 1.225 mmt this crop year, up 50% from the 2016/17 crop year.

**

DTN 360 Poll

Canada's federal government has backtracked on proposed tax reform measures pertaining to farm corporations. Are you satisfied with what you are hearing? Share your thoughts on this week's poll that is found at the lower right of the DTN Canada Home Page.

We thank you for you input!

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES/)

© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.