On July 28, G3 Canada Ltd released updated Pool Return Outlooks, the company's indication of expected producer returns for marketing over the 2016/17 crop year. All grades of durum saw PRO's reduced by $10 per metric ton, with the Early Delivery Pool PRO lowered to $297/mt in store Vancouver or Thunder Bay for grain marketed over the fall period. Meanwhile, the Annual Pool PRO for grain marketed over the entire crop year was reduced to $291/mt, with results quoted for No. 1 Canada Western Amber Durum 13% protein. This time last year, both the Early Delivery Pool and the Annual Pool were reported at $390/mt in store.
G3 commentary indicates that Canadian dollar weakness is only partially offsetting the weakness experienced in export markets.
On Tuesday, DTN's National Durum Index of U.S. bids was reported at $5.17/bushel, the lowest level recorded since September 2010. The downward trend in the wheat market been a negative factor in the durum market, but also the premium durum trades over wheat has also been under pressure over time. The spread between DTN's National Spring Wheat Index and the National Durum Index has drifted from $2.30/bu. USD (durum over spring wheat) at the start of the Canadian 2015/16 crop year to a low of $.41/bu. on April 20 and has since recovered to $.83/bu. The mean spread over the past crop year was $1.21/bu.
The attached graphic shows the trend in forward prices on the Prairies as a snapshot in time on Aug. 3, as reported by pdqinfo.ca. The upward slope of the line represents a carry market, with the price trending higher from $248.18/mt in September to $264.27/mt in May. This represents a $16.09/mt or $.44/bushel reward for storing nine months. The challenge for marketers is to determine if this makes sense, given the mix of crops grown and the potential reward for storing a competing crop.
To date, global markets are signaling a year-over-year build in global durum stocks, although North American quality remains the large unknown.
Cliff Jamieson can be reached at firstname.lastname@example.org
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