It remains early in the 2019 durum harvest on both sides of the Canada-U.S. border but buyers are taking note of the challenges faced.
On Monday, USDA estimated Montana's durum harvest at 44% complete, up only 4 percentage points from the previous week and well below the five-year average of 81%. North Dakota's harvest is estimated at 50% complete, also up 4 points from the previous week and well below the five-year average of 79%. USDA's harvested acre estimate as of Aug. 1 shows an expected 585,000 acres for Montana and 680,000 acres for North Dakota, a combined total that represents 93.3% of the estimated U.S. harvested acres.
As of Sept. 9, Saskatchewan Agriculture estimated 10% of the province's 3.997 million harvested acre estimate was off, while as of Sept. 10, Alberta Agriculture estimated 47.3% of the province's 750,100 harvested acres was harvested. It is likely that progress over the week was limited on the Prairies as it was in the northern states, with AAFC reporting a range of 15 millimeters (mm) to 65 mm of precipitation over much of southern Saskatchewan for the seven days ended Sept. 16.
Quality will be difficult to evaluate overall, with social media reports of some crops holding grades through the rains while other reports point to sprouting seen in standing crops.
Market signals show buyers taking note. A favorite quote from a past durum miller presentation is "If you are calling the buyer, the price is going down. If the buyer is calling you, the price is on its way up." Buyers will be calling this year.
As reported on Tuesday, Canada's exports through licensed terminals as of week 5, or the week ended Sept. 8, totaled 495,500 metric tons (mt), up 80.3% from the same five-week period in 2018-19 and 40.3% above the five-year average. This is the highest volume reported for this period in five years, with 661,100 mt shipped in the first five weeks of 2014-15, a crop-year facing similar circumstances.
Looking at cash bids, DTN's U.S. National Durum Index was reported at $4.77 USD on Monday, after remaining in a narrow range most of this year. Since Aug. 12, the National Durum Index has traded over the National Spring Wheat Index, closing at $0.29/bu USD on Monday (durum over spring wheat). Using the Canadian crop year (Aug 1 through July 31), the durum cash index averaged $0.51 below spring wheat in 2018-19, $0.25 above spring wheat in 2017-18, $0.67/bu above spring wheat in 2016-17, $1.22/bu over in 2015-16 and $3.45/bu over in 2014-15. The five-year average is an average $1.02/bu premium to cash spring wheat. DTN reports also show upward movement in forecast bids at U.S. mills this week.
Price data reported by pdqinfo.ca shows a sharp move higher on Monday, Sept. 16, across all regions reported. Cash bids rose from $3.84/mt to $7.50/mt to bids ranging from $245.45 to $258.05/mt ($6.68 to $7.02/bu).
For one indication of where prices can go, we look back to a similar harvest in 2014. As of this particular week, or the week ended Sept. 15, only 8% of the durum crop was harvested, behind the current pace. This harvest dragged on to the week of the final crop report or Oct. 27. Durum fundamentals in 2014-15 were similar to current crop-year estimates; production is estimated at 5.2 million metric tons (mmt) compared to the 2019-20 estimate of 5 mmt. Total supplies for 2014-15 are estimated at 6.939 mmt, which compares to the current 2019-20 estimate of 6.619 mmt.
Saskatchewan Agriculture's weekly average cash price for the province moved from $251.91/mt as seen over much of August 2014 to $300.60/mt by Oct. 1, $364.67/mt by early November and reached a high of $368.08/mt by early January, an increase of $116.10/mt or $3.16/bu.
This same period saw DTN's National Durum Index rise from $8.31/bu USD on Aug. 1 to $13.33/bu USD by Nov. 4.
Canada's crop year exports for 2014-15 show 25% of export shipments falling within the two top grades, while 65% graded a No. 3 CWAD.
One other factor to consider is that AAFC, in its August Canada: Outlook for Principal Field Crops report, quotes International Grains Council data that states that global stocks of durum are forecast to fall by 1.2 mmt in 2019-20 to 8.2 mmt, the tightest stocks seen since 2014-15. Since this report was released, Statistics Canada estimated Canada's 2019 production at 4.420 mmt, close to 700,000 mt lower than the volume used by AAFC in their August estimate. Stocks may not only be estimated to tighten further, but downgraded product may limit the availability of high quality milling stocks.
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Cliff Jamieson can be reached at email@example.com
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