Canada Markets

Statistics Canada's March 31 durum stocks, at 2.663 million metric tonnes, represent the lowest stocks on this date since 2008, when stocks levels were announced at 2.071 mmt. In that particular year, total usage in the last four months of the crop year, from April through July, was 1.262 mmt, leaving a carry-out of 809,000 mt. 2008 represented the lowest usage in that four-month period as well as the lowest carryout in the period from 2005 to 2012, as seen on the attached chart.

For discussion's sake, the current Agriculture and Agri-Food Canada's (AAFC) estimated carryout of 1.3 mmt was plotted for 2013, which implies a usage or disappearance of 1.363 mmt over the last four months of this crop year. Note that this number was presented in its April 17 Canada: Outlook for Principal Field Crops, with a new version of the monthly release to arrive any day now.

The 1.363 mmt of disappearance would represent the second lowest usage in the four-month period over the 2005 to 2012 period. 2012's disappearance was 1.601 mmt, the three-year average is 1.642 mmt and the five-year average is 1.617 mmt.

Given that week 40 data from the Canadian Grain Commission indicates that durum's year-to-date disappearance is 18.2% higher than the same week in the 2011/12 crop year, while 25.1% higher than the three-year average, it is very conceivable that total disappearance in the last four months of this crop year will be on track to match or beat movement in recent years. This would suggest disappearance in the 1.6 mmt range, leaving a carry-out of near 1 mmt.

The only time carryout has been below 1 mmt since year 2000 was in 2008, when carryout hit 809,000 mt. Between 1980 and 2000, carryout was below 1 mmt only five times, with the lowest in 1985 at 524,000.

Watch for adjusted forecasts to come from the government in time, while tightening stocks should see foreign buyers take note and lead to supported prices in time.

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

(AG)

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