Durum bids fell sharply during the past week on both sides of the Canada/United States border. As seen on the attached chart, bids across southern Saskatchewan and Alberta fell from $100.97/metric ton to $111.35/mt ($2.75/bushel to $3.03/bu) during the past week. This sharp move is also seen in the northern states, with DTN's National Durum Index falling by $2.25/bu USD over the past week to $12.75/bu USD.
Feb. 4 bids for these three regions range from $586.19/mt in southwest Saskatchewan to $597.66/mt in southeast Saskatchewan, as seen on the attached chart, while taking out the lows from the dip reached from Sept. 17 to Sept. 27. Pdq bids as of Feb. 4 range from $196.32/mt to $203.66/mt below the crop year highs reached on Aug. 31, 2021.
Despite the current pace of exports being ahead of the pace needed to reach the current 2.350 million metric ton forecast set by Agriculture and Agri-Food Canada (AAFC), exports to most major buyers are down significantly while commercial stocks are high.
According to Canadian Grain Commission statistics as of December, exports to Italy are down 70% from the same August-to-December period in 2020, while exports to Algeria are down 78%, exports to Morocco are down 43% and exports to Tunisia are down 88%. While exports to the U.S. are up 69,000 mt or 111% during this period, this falls far short of the 1.07 mmt year-over-year drop in the other four importing nations.
Meanwhile, Canada's commercial stocks as of week 26 or the mid-point of the crop year are reported at 945,300 mt, higher than this week in any of the past five years, while 20.5% higher than the five-year average for week 26, despite the much smaller crop. Of this volume, 434,200 mt is situated in export positions in St. Lawrence terminals while 72,500 mt is instore Vancouver.
Durum prices may have done their job to attract acres for 2022. AAFC is currently estimating acres to rise by 9.5% in 2022, while estimating the average producer price will fall by 42.9% to $400/mt.
When the durum/spring wheat spread is considered, using DTN's cash market indices, we see this spread dip to $3.83/bu USD on Feb. 4 (durum over spring wheat), the lowest seen since mid-August. During the past five years (2016-17 to 2020-21), ProphetX calculates the mean spread at $0.35/bu, with the maximum spread at $2.88/bu. On average during the past five years, this spread has averaged $0.30/bu USD on Feb. 4, compared to the current $3.83/bu reported as last week's close.
When pdq's historical data is considered, we see that the crop year high during the past five years (2016-17 to 2020-21) was reached in the first half of the crop year in three of five years, or 60% of these five years. At the same time, this high was reached in the second half of the crop year in each of the past two crop years, with the crop year high for the southeast Saskatchewan region reported on July 31 or the last day of the 2020-21 crop year and in mid-May in the 2019-20 crop year.
Perhaps the market is also telling us what we can expect from Statistics Canada on Feb. 8 when the Dec. 31 stocks are released?
Cliff Jamieson can be reached at firstname.lastname@example.org
Follow him on Twitter @Cliff Jamieson
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