Canada Markets

Durum markets have remained subdued with global stocks suggested to be large enough to meet demand while producers hold product for improved returns. Attached is a monthly chart of the DTN National Durum Index which provides data back to April 1, 2003 and provides a graphical representation of cash durum market trends over that period.

During this calendar year, durum prices reached a monthly high in March at $8.30 per bushel. The low was reached in May at $6.98/bu. Since that, markets have firmed, with Nov. 7 close at $8.22/bu., just cents away from testing this year's high. Current prices are holding above a trend line drawn from May 2010 lows.

Here are statistics on DTN's National Durum Index generated by DTN's Prophet X software:

2003-2012 High: $22.35/bu., reached on Feb 25, 2008

2003-2012 Low: $3.00/bu., reached Dec 23, 2005

2003-2012 Mean: $6.55/bu.

2003-2012 Standard Deviation: $3.64/bu. Approximately 2/3 of the prices fell within the range between $2.91/bu. to $10.18/bu.

2003-2012 Correlation to HRS: The correlation between the movement in the Minneapolis continuous weekly future and the DTN National Durum Index is 89%, meaning that movement in the spring wheat future explains 89% of the movement in durum cash prices. Wheat's most recent resilience is certainly a supportive feature in the determination of durum prices.

In other recent news related to durum, the Borsa Italiana Exchange in Italy will begin to trade a new durum future beginning on November 19. Italy is said to be the second largest importer of durum next to Egypt, importing 1.9 million metric tonnes in 2011/12. The country's production of pasta totaled 3.32 mmt in the same year. While the per capita consumption of pasta in the U.S. is said to be 8.8 kg, Italy's per capita consumption is 26 kg. Italy is also a major durum producer, producing 4.19 mmt in 2012, as compared to Canada's 4.4 mmt.

This contract will be the first of its kind in Europe. The contract will trade in Euros with the delivery point to be southern Italy. It is suggested that this contract will not be of interest to North American traders due to the delivery mechanism as well as differences in quality specs and currency risk.

While the optimal outcome is an increase in volumes on ICE Canada's durum future, the open interest is now 46 contracts and its acceptance has been slow to develop. While the Ice Exchange continues its slow road to growing volumes in their durum contract, I am most looking forward to watching the development of the Italian future as an additional tool which can lead to price discovery signals.

Cliff can be reached at cliff.jamieson@telventdtn.com

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