Canada Markets

Durum Market Remains Under Pressure

By Cliff Jamieson , Canadian Grains Analyst
This chart compares Canada's cumulative durum exports for 2014/15 (blue line) with 2015/16 (red line) to the end of week 31, or the week ending March 6. The black line represents the year-over-year percent change in export volumes, as measured against the secondary vertical axis on the right. As of week 31, 2.903 mmt of durum has been exported, representing a volume which is 10.4% below year-ago volumes (licensed exports only).

DTN's National Durum Index closed at US$5.46 per bushel on Monday, down from $7.47/bu on Aug. 3, the first day of the 2015/16 crop year and the lowest level seen since September 2010. Durum's premium to spring wheat, according to the difference between DTN's National Durum Index less the National Spring Wheat Index, has slipped to US$0.69/bu, the lowest level seen since June 2014 and could have negative implications for seeded acreage this spring.

Last week's USDA report saw 2015/16 ending stocks of U.S. durum remain unchanged at 34 million bushels, or 925,300 metric tons, up 31% from the previous year and the highest U.S. carryout since 2011/12. This volume represents 30% of annual use, the highest stocks-to-use ratio seen since 2006/07.

According to Agriculture and Agri-Food Canada's February report, Canada's ending stocks of durum are expected to grow 144,000 metric tons, or 15%, to 1.1 million metric tons, after ending the 2014/15 crop year with ending stocks of 956,300 mt, the lowest volume carried out since 2008/09. Depending on what happens in the balance of the crop year, Canada's current export pace could see ending stocks pull back below 1 million metric tons this crop year.

The accompanying chart compares Canada's cumulative exports for 2014/15 (blue line) with 2015/16 (red line) to the end of week 31, or the week ending March 6. The black line represents the year-over-year percent change in export volumes, as measured against the secondary vertical axis on the right. As of week 31, 2.903 mmt of cumulative volumes have been shipped, which represents a volume which is 10.4% below year-ago volumes (licensed exports only). As recently as week 29, cumulative exports were just 5% below year-ago volumes.

The current cumulative volume of 2.9 mmt is approximately 280,000 mt ahead of the steady pace needed to reach the current AAFC export target of 4.4 million metric tons as of week 31, or the first 60% of the crop year. This export projection has been increased from a low of 4.1 mmt earlier in the crop year, while the possibility exists that this forecast will be increased again.

The latest Statistics Canada exports of grains by final destination released Tuesday shows a sharp drop of 64% in volumes shipped to the U.S. in the first six months of the crop year, along with a 38% drop in volumes shipped to Western Europe. Shipments to northern African countries got off to a slow start but are reported to be 52% above year-ago volumes, driven by sales to Algeria and Tunisia.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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