Canada Markets

Prairie durum prices may be showing some signs of stabilizing over recent weeks although concerns remain. Saskatchewan Agriculture reported the average No. 1 CWAD price of $222.40/metric ton delivered to Saskatchewan facilities for the week ending Dec. 19, up $6.94/mt from the previous week. This is the largest week-over-week increase reported in over a year, or since the week ending Nov. 1, 2017.

Given the province's data, this price is roughly $44.66/mt ($1.22/bushel) or 16.7% lower than the year-ago price reported, while is 23% below the three-year average. This price move is also consistent with the drop in reported global export offers, with the European Union reporting International Grains Council export offers FOB the French Port-la-Nouvelle as of Dec. 19 showing the export price of $244 USD. This is up 2% over the past month and 10% below the same week in 2017-18. The ICG has not reported Canadian offers for some time.

Saskatchewan news outlets are reporting on the conclusion of a recent durum wheat trade mission to Italy and North Africa, indicating "good interest" in Morocco and Algeria, along with reported optimism over the resumption of sales to Italy.

As of week 19, licensed exports were reported at 1.1983 million metric tons, 193,300 mt or 13.9% behind the same week last year, while 24.7% below the five-year average for this week. As of the month of October, exports to Algeria are down 59,300 mt from the same period last crop year, movement to Morocco is up 94,700 mt from last year, while movement to Italy is down 186,600 mt, or 66%, to 96,700 mt.

Increased exports will be key to further supporting price. Saskatchewan Agriculture data shows that price for No. 1 CWAD durum fell by an average of $39.09/mt, or 11.9%, on average in the first three months of the calendar year over the past three years. As well, a recent Canada Markets Blog showed how an average of 33.4% of crop year exports were realized as of week 19 in the crop year over the past five years. This is an average pace of movement that projects to crop year exports of roughly 3.6 mmt as compared to the current 4.2 mmt forecast reported by AAFC in its December supply and demand estimates.

Current AAFC estimates indicate that Canada's 2018/19 durum stocks will increase by 35.4%, to 2 mmt, after December revisions, which included a 100,000 mt lower revision in exports to 4.2 mmt and a slight increase in domestic use of 40,000 mt. This carryout would be the highest realized since 2009/10, while the range of producer bids was scaled back by $5/mt to $215/mt to $245/mt, down from last year's $265/mt.

Producers may face a difficult choice concerning durum planting intentions in the absence of favorable demand signals. The Saskatchewan government's weekly prices go back as far as April, 2014, where prices ranged from $194.35/mt to a high of $206.39/mt. In this particular year, Canada's seeded acres fell by 4% from the previous year to 4.780 million acres, which was the last time that seeded acreage was below the 5-million-acre mark. This compares to the 6.185 million acres seeded in 2018, the largest seeded acres seen in 18 years.

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

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