Canada Markets

DTN's Durum Cash Index Trends Sharply Higher

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
@CliffJamieson
DTN's National Durum Index (black line), based on U.S. durum bids, was reported at $6.04/bushel USD on Tuesday, reported higher in 23 of the last 31 days. The blue line represents DTN's National Spring Wheat Index. The red line on the lower study represents the spread between the two, reported at 96 cents USD, the strongest seen since August 2017. (DTN ProphetX chart)
DTN's National Durum Index (black line), based on U.S. durum bids, was reported at $6.04/bushel USD on Tuesday, reported higher in 23 of the last 31 days. The blue line represents DTN's National Spring Wheat Index. The red line on the lower study represents the spread between the two, reported at 96 cents USD, the strongest seen since August 2017. (DTN ProphetX chart)

According to DTN's cash index of United States durum bids, the index crossed the $6 USD level for the first time on Oct. 22, closing at $6.03/bushel after a steady rise since Sept. 9. This particular chart shows we haven't seen a rise such as this since the move from April to August in 2017 when this index rallied $3.13/bushel from $5.13 to $8.26/bu. DTN reports cash bids in North Dakota as high as $7/bushel on Wednesday.

The National Durum Index/National Spring Wheat Index spread is reported at $0.96/bushel on Tuesday, the widest this spread has been reported since August 2017. Nearby resistance is seen at 2016/2017 highs ranging from $1.54/bu. to $1.64/bu. on this chart. Over the last three Canadian crop years (Aug.1 to July 31) this spread has averaged a mere $0.14/bu. USD, ranging from minus $0.51/bu. to a positive $0.67/bu. spread in U.S. currency.

Forecasting a top could prove challenging given the uncertainty surrounding production, quality and exportable supplies. This month, Agriculture and Agri-Food Canada increased its estimated producer returns for Prairies producers by $5/metric ton to a range of $240 to $270/metric ton ($6.53 to $7.35/bu.), well above their average estimate of $235/mt in 2018-19. On Oct. 23, pdqinfo.ca is reporting a cash bid of $276.60/mt in southern Alberta, $267.02/mt in southwest Saskatchewan and $280.55/mt in southeast Saskatchewan, already averaging higher than the upper-end of AAFC's range.

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AAFC's most recent estimates have pegged 2019-20 stocks at 1 million metric tons, which would be the lowest in five years. AAFC's stocks/use ratio is calculated at 17.5% for 2019-20, down from 30.4% in 2018-19. While leaving Canada's export potential unchanged at 4.7 mmt this month, AAFC increased their estimate for feed, waste and dockage by a modest 150,000 mt to 579,000 mt, close to unchanged from 2018-19. In 2016-17, this volume is estimated at 2.1 mmt, likely the end result of adjustments made to correct previous estimates.

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

Follow him on Twitter @CliffJamieson

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DTN's National Durum Index (black line), based on U.S. durum bids, was reported at $6.04/bushel USD on Tuesday, reported higher in 23 of the last 31 days. The blue line represents DTN's National Spring Wheat Index. The red line on the lower study represents the spread between the two, reported at 96 cents USD, the strongest seen since August 2017. (DTN ProphetX chart) 
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