Prices to rise as yield prospects drop for durum

CNS Canada — Mounting dryness concerns in some of the prime durum-growing regions of Western Canada have likely already cut into yield prospects, which should support prices going forward.

Canadian farmers intended to plant 5.5 million acres of durum this year, well above the 4.75 million seeded the previous year and the largest crop since 2009, according to Statistics Canada data.

However, the major durum-growing areas in Saskatchewan and Alberta are also some of the driest areas in the Prairies this year.

“The market is very uncertain about the upcoming production,” said Jerry Klassen, manager of Swiss-based GAP S.A. Grains and Produits in Winnipeg.

Uncertainty was keeping farmers from selling, he said, while grain companies were also not making any sales because of that lack of commitment from farmers.

While more moisture in the especially dry regions of western Saskatchewan and into Alberta would be welcome, Klassen said some damage was already done and some yield losses were likely irreparable.

“The world still needs a fairly large export program from Canada,” said Klassen. However, “the world may have to look to the U.S., because Canada just won’t have anything available,” he added, noting conditions for the North Dakota durum crop remain relatively favourable.

Competition from the U.S. will keep durum prices from rising to the same extent as they did a year ago, but Klassen said there was still plenty of room to the upside.

Bids had room to rise by as much as $2 per bushel or more from current levels, going up to the $9-$9.50 per bushel area for Nos. 1 and 2 durum over the next few months.

Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

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