The 2010-21 crop year could be a year unlike others as international grain buyers position themselves for a continued pandemic threat, making comparisons to historic activity difficult. On Oct. 14, Bloomberg ran a piece titled Countries Rush to Hoard Food as Prices Rise and COVID worsens, pointing to importers "trying to protect themselves on concerns the coronavirus will disrupt port operations and wreak havoc on global trade."
This comes at a time when weather is viewed as a bullish factor for grain markets, with dry conditions in the southern United States, Russia and soybean planting delayed in central Brazil because of the two-week delay to the start of the rainy season.
These fears may be well-founded, with CNBC reporting today that the World Health Organization is expressing concern over the recent COVID-19 outbreak in Europe with intensive care beds close to capacity in some areas.
The prairie durum market is showing some interesting signals. As of week 10, prairie producers have delivered 1.091 million metric tons of durum into the licensed handling system, up 34.6% from the same period in 2019-20 and 57.9% higher than the three-year average.
With exports off to a slow start, commercial stocks of durum continue to signal increased shipping ahead, with stocks increasing to 1.0269 mmt as of week 10, up 69.4% from one year ago and 54.5% higher than the three-year average.
A quick calculation shows that producers have delivered 17.2% of farm supplies, as of week 10, defined as the Aug. 1 carry-in stocks estimated by Statistics Canada added to the agency's most recent production estimate. This compares to the five-year average of 11.3% of farm supplies delivered over this period.
Over this period, prices have rallied from harvest lows, just as seen in the fall of 2019-20, while are starting from a much higher base, as seen on the attached chart.
Across the three regions southern regions of the Prairies shown on the attached chart, durum prices rose from $36.13/mt to $45.49/mt from late-August to early Oct. 2019. While it's impossible to know if such a move can be duplicated, the recent move higher started from a range of $265/mt to $272/mt over the three regions.
The recent uptrend in cash bids shows that prices have retraced from 46% to 81% of the recent down trend in prices, while the trend remains your friend.
Cliff Jamieson can be reached at email@example.com
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