This week's monthly USDA World Agricultural Supply and Demand Estimates report scaled back their estimate of Canada's all-wheat export potential by 500,000 metric tons, to 21.5 million metric tons, Meanwhile, it increased the forecast for Canada's domestic use by an equivalent amount, citing increased feed use given lower crop quality tied to the delayed harvest.
This forecast may likely be proven optimistic, with Canada's licensed wheat exports approximately 732,000 mt behind the steady pace needed to reach the current AAFC target of 16.7 mmt, while licensed durum exports are roughly 540,000 mt behind the steady pace required to achieve the current 5.3 mmt target. This shortfall will be offset somewhat by unlicensed exports and the export of flour, although is seen at a time when the Canadian dollar is weak while U.S. inspections of all-wheat are higher than the volume needed to achieve the USDA's expected 26% year-over year-increase in all-wheat exports.
Looking at the USDA's November durum estimates, U.S. production was left unchanged at 104 mb (2.83 mmt), the highest production since 2009/10. Import demand was trimmed by 2 mmt, to 36 million bushels, (approximately 980,000 mt), which is 13.3% below the five-year average and 9% below the 10-year average. Export demand was trimmed by 5 mb, to 30 mb (816,500 mt), below both the five- and 10-year averages. Domestic demand was also trimmed by 5 mb since October, given latest U.S. milling data. The end result is an increase in 2016/17 U.S. ending stocks for the third consecutive month to 55 mb (1.5 mmt), a 96% increase from 2015/16 and the largest carryout seen since 1998/99. Quality is also high, with the average grade in North Dakota and Montana a No. 1 Hard Amber Durum, although diversity is noted across the region given high DON levels in northern North Dakota and into Montana.
Week 14 Canadian Grain Commission statistics shows cumulative producer deliveries of 1.1056 mmt into the licensed handling system as of the week ending Nov. 6, 16.9% behind the same period in 2015/16. The delayed harvest and quality challenges on the Prairies are playing a role, while most recent AAFC commentary along with waning U.S. export data is pointing to a challenging export market, with the global market expected to build stocks this crop year.
Nov. 6 data shows a cumulative total of 816,700 mt exported in the first 14 weeks of this crop year, down 9.6% from last year and 22.6% below the five-year average for this period. Total commercial stocks of durum are reported at 585,700 mt, down 22% from the five-year average. As well, the quality in store western terminal positions is seen drastically slipping. In week 1 of the 2016/17 crop year, the percentage of stocks falling into the top two grades of No.1 and No. 2 CWAD was reported at 43.7% of total stocks. The most recent data shows this percentage at 20.3%, which is far below the five-year average of 52% for this week and limits potential in the higher-end markets.
As of Nov. 10, DTN's National Durum Index has climbed to $6.37/bu. USD, a sharp recovery from the $4.80/bu. Aug. 12 low and the highest level reached since Nov. 27 2015. A glance at pdqinfo.ca shows 1 CWAD 13% protein ranging from $8.37/bu. in northwest Saskatchewan to $8.73/bu. in southern Alberta. The hunt for blending quality grain will continue to be a feature in the 2016/17 crop year and continue to support higher qualities.
The European Commission highlights CWAD offered form the St Lawrence as its global benchmark for durum, using the International Grains Council as their source. As of Nov. 9, CWAD is valued at $330/mt USD, up 18% in the past month although only a 5% year-over-year increase.
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