Canada Markets

DTN's Cash Spring Wheat/Durum Price Spread

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The red line on the chart represents DTN's National Spring Wheat Index (USD/bushel) that has traded above the National Durum Index since last July (blue line). The green line on the lower study represents the Spring Wheat/Durum spread, which closed at $0.66/bu. USD on Tuesday. (DTN ProphetX chart)

The attached chart shows the relationship between DTN's spring wheat and durum cash indices, including the March 20 close of $5.38 USD for spring wheat and $4.72/bushel USD for durum, for a spread of $.66/bu., as seen in the lower study. This is the first time in five years where spring wheat is trading at a premium to durum on this day (March 20), with spring wheat shown at a $0.51 premium on March 20 2014. This spread has seen spring wheat consistently trade higher since the Aug. 1 Canadian crop year began, with the current spread of $.66/bu. close to the $0.63 spread average over this entire period.

In seeded acre data for both the United States and Canada since 2013-14, this spread, whether positive or negative, explained the year-over-year percent change in seeded acres for spring wheat and durum in three of the five years; 2019 will be another of those years.

The March Agriculture and Agri-Food Canada supply and demand estimates suggest the current environment favoring spring wheat will lead to an 8.7% year-over-year increase in spring wheat acres while durum acres are forecast to be pared by 20%. Such a move is also supported by ending stocks of wheat that are forecast to fall to 4 million metric tons, or to 15% of total 2018-19 disappearance, while ending stocks of durum are expected to rise to 2 mmt, or a bearish 38.6% of disappearance.

The USDA's Prospective Plantings report will be released on March 29, while Statistics Canada will release official planting estimates for Canada's principal field crops on April 26.


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