Canada Markets

The Sept. 30 Small Grains 2021 Summary included a higher-than-expected forecast for U.S. durum production when compared to the Dow Jones average of pre-report estimates, but still spells trouble for the North American market.

On Thursday, USDA estimated production at 37.259 million bushels (mb), or 1.014 million metric tons (mmt). This is the smallest crop seen in chart data going back to at least 1984-85 and compares to the five-year average of 1.956 mmt or is roughly 50% of average. This is shown by the brown horizontal line on the chart.

In 2020-21, total U.S. disappearance of durum is reported at 121 mb or 3.3 mmt, while the five-year average disappearance is calculated at 114 mb or 3.1 mmt.

A calculation of production less imports results in a negative number for 2021-22; likely for the first time ever, the U.S. will import more than is produced in the country, which will place increased pressure on Canadian supplies.

Over the past week, we've seen AAFC increase their forecast for the average producer price for 2020-21 by $50 metric ton (mt) to $400/mt, although this remains far short of the current move in cash prices.

A look at the southeast Saskatchewan bid reported by pdqinfo.ca shows a high reached of $793.98/mt by Aug. 31, a low of $615.98/mt by Sept. 17 while a move higher to $696.11 by Sept. 30. This includes a $61.16/mt move higher this week alone, with a $40 to $50/mt increase reported across the Prairie regions monitored on Sept. 29.

Current USDA estimates show the U.S. is forecast to import close to 50% of AAFC's forecast Canadian exports of 3.1 mmt in 2021-22 or 1.4 mmt, which coincidentally, is close to the 1.490 mmt shipped to Italy in 2020-21. A repeat of this volume of business to Italy would see these two countries tie up Canada's forecast exports, while in 2020-21, the CGC reports Canadian durum shipped to a total of 31 countries totaling 6.0576 mmt. Of these countries, Morocco and Algeria were each shipped slightly more than 1 mmt.

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

Follow him on Twitter @Cliff Jamieson

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