Canadian yields boost markets for U.S. durum

(Commodity News Service Canada) — Wet conditions that plagued Canada’s Prairies throughout the growing season had a negative effect on Prairie wheat growers’ durum crop. However, that could be good news for U.S. producers.

Jim Peterson, marketing director with the North Dakota Wheat Commission at Mandan, N.D., said there will be some advantages for U.S. producers, given the below-average crop north of the border.

“We had a large crop and I think our grade profile is certainly better than what the 2010 Canadian durum crop is, although it’s not the best we’ve ever seen,” Peterson said.

Export sales have been hitting a bit of a skid of late, thanks to some events taking place in Africa, he said.

“The big challenge for both markets is what happens with Algeria and what happens there,” he said. “The government is trying to force millers to use their domestic crop, which would hamper private imports.”

The wet conditions across Canada and parts of the U.S. have resulted in a significant portion of durum crops classified as feed wheat. The poorer-quality product is something in which end users are never particularly interested.

“As you get into lower grades, you get lower mill yields for millers; lower pasta colour means lower-quality pasta,” Peterson said.

“Down the ladder”

As much as end users try and avoid the lower-quality wheat, Peterson said it can still find its way into the market.

“It’s kind of surprising when supplies get tight, buyers will find a way to get by with some of the lower quality,” he said. “If high-quality wheat is very hard to find or if the price really goes up, guys will come down the ladder and accept the lower-quality product.”

The high price of corn is sending a significant amount of the poorer-quality wheat into the feed market, he added.

With strong prices for corn and soybeans, some reports have said there will be very little wheat seeded in the upcoming crop year. Peterson, however, said he isn’t overly concerned about a severe decline.

“We know our producers will grow wheat, because it’s a crop that grows well here, and we feel they’ve had two pretty good pricing years,” he said. “There are some good pricing opportunities that will stabilize wheat acres.”

But to see any additional acres seeded, Peterson said prices would have to increase.

“The market will determine that, based on whether or not Canada is still wet, and what is happening in Russia,” he said, citing that country’s recent drought.

Current elevator deliveries for durum wheat in North Dakota are bringing anywhere from US$6.50 to US$7.25 per bushel, according to Prairie Ag Hotwire. The high bids are the highest that have been seen all year.

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