Tighter supplies, solid demand underpin durum bids

MarketsFarm — Tighter global supplies are keeping the Canadian durum market well supported this winter, with firmer prices likely when the Port of Thunder Bay reopens for the spring.

“We’re seeing a very strong export demand for durum,” said Jerry Klassen, manager of Canadian operations for Swiss-based GAP S.A. Grains and Products in Winnipeg.

Canada has exported 2.2 million tonnes of durum during the crop-year-to-date, according to the latest data from the Canadian Grain Commission for the week ended Jan. 12. That compares with the 1.5 million tonnes exported during the same time period the previous year.

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Export destination data is only current until the end of November, with Turkey a larger-than-normal customer so far this year. Turkey allows duty-free imports for durum as long as the resulting products are exported, according to a report from the U.S. Department of Agriculture. Canada, Russia and Kazakhstan account for much of the country’s imported grain.

While the seasonal closure of the Port of Thunder Bay will slow some Canadian durum exports over the next few months, Klassen expected exports would “resume pretty heavily in April/May/June.”

He cited tighter stocks in Europe and the U.S. as primary drivers for the durum market, noting that prices “probably have some pretty good upside here.”

No. 1 durum is currently trading for about $8 to as high as $8.25 per bushel in the elevator system, with discounts for Nos. 2 and 3 of about 40-50 cents per grade.

While poor conditions left more durum in the lower grades this year, Klassen said the lower-quality grain was moving well as most end-users will readily take No. 3 durum. He expected to see more movement and higher prices for the lower grades going forward as supplies of No. 1 durum dwindle.

Canadian durum ending stocks for 2019-20 are forecast by Agriculture and Agri-Food Canada at only 850,000 tonnes, roughly half of the 2018-19 carryout.

— Phil Franz-Warkentin reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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