Jerry Klassen of Winnipeg-based Resilient Commodity Analysis said conditions so far have been optimal for the wheat variety and if all goes well, above-average yields could be on the horizon.

“We’ve had significant rains in western Saskatchewan through the growing season. Seeding was a little bit delayed in some areas, but for the most part, the crop is off to a great start,” he said.

However, Klassen recalled that last year’s crop was also off to a great start before dryness and drought conditions reigned supreme from mid-June to the end of the growing season.

“That resulted in lower yields. Right now, I would say the crop is just about the same or a little bit better at this time,” he said. “This year, it looks like the forecast calls for regular rains in the durum areas and we’re not expected to see the extreme heat like we had last year in the summer.”

Klassen estimated that six million acres of durum wheat were seeded this year across Canada with expected production at approximately 7.5 million tonnes. In Agriculture and Agri-Food Canada’s (AAFC) monthly principal field crops outlook released on June 20, the agency estimated 6.343 million acres with production at 5.655 million tonnes. Statistics Canada (StatCan) will release their latest acreage estimates on June 27.

Canadian Western Amber Durum (CWAD) prices in Western Canada as of June 21 ranged from C$349.87 to C$366.48 per tonne (C$9.52 to C$9.97 per bushel) according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes).

As durum growers are usually reluctant to forward-sell, according to Klassen, prices in Canada are now at a similar level to those in Europe.

“What we’re seeing here is a relatively bigger crop developing in Turkey than last year. So we’re expecting an increase in Turkish exports and that harvest is going to move into full swing here in July,” he said, adding that the durum harvest is also expected next month in southern France and Spain.

Areas that have already begun their harvest are so far reporting good quality with slightly below-average yields.

“What’s happened is not (so much) Canadian farmer selling, but we’re seeing farm selling from other areas in Turkey and also in Europe … There’s significant harvest pressure in the durum market now. Canadian durum values probably are a little bit overvalued yet compared to where we could see prices a month from now.”

Klassen expects prices to stay put and then decline as growers jump at the chance to convert their durum crop into cash flow.

“The Canadian market will likely stay flat for the next three to four weeks and then maybe come under a little bit of pressure at harvest yet, but we’re not expecting a rally until probably next spring when the market starts to factor in lower acreage in Canada and the United States,” he said.

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Wheat futures tested fresh contract lows during the week, but also uncovered support at times amid the general downtrend.

Average Canada Western Red Spring (13.5%) wheat prices were up by C$0.80 to down by C$3.50 per tonne across the Prairies, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices ranged from C$288.80 per tonne in southeastern Saskatchewan to as high as C$317.10 per tonne in southern Alberta.

Quoted basis levels varied from location to location and ranged from $47.90 to $76.30 per tonne above the futures when using the grain company methodology of quoting the basis as the difference between the U.S. dollar denominated futures and the Canadian dollar cash bids.

When accounting for currency exchange rates by adjusting everything into Canadian dollars (C$1=US$0.7411) CWRS basis levels ranged from C$4.30 to C$19.90 below the futures.

Canada Prairie Spring Red (CPSR) wheat bids were lower, down by C$0.10 to C$0.60 per tonne, with prices ranging from C$247.30 to C$272.10 per tonne.

Average durum prices lost C$4.70 to as much as C$6.90 per tonne, ranging from C$392.10 to C$407.80 per tonne.

Spring wheat futures in Minneapolis were down by 3.25 cents per bushel in the May contract to settle at US$6.5550 per bushel on Feb. 22.

The Kansas City hard red winter wheat futures, which are now traded in Chicago, are more closely linked to CPSR in Canada. The May Kansas City wheat contract was up by 1.50 cents on the week to close at US$5.7150 per bushel on Feb. 22.

The May Chicago Board of Trade soft wheat contract settled at US$5.7925 per bushel on Feb. 22, up by 12.00 cents on the week.

The Canadian dollar held steady relative to its United States counterpart, closing at 74.11 U.S. cents on Feb. 22.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg. 

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There were gains in Minneapolis spring wheat, while Kansas City and Chicago winter wheat contracts slipped back.

At the beginning of the week there were steep increases for wheat as Russian launched missile and drone attacks on Ukraine’s ports on the Black Sea, but also its ports on the Danube River. By Wednesday those gains had been erased as concerns over the war subsided.

The reduced severity of drought conditions across the Canadian Prairies and the United States Plains provided additional pressure on wheat.

Average Canadian Western Red Spring Wheat (CWRS, 13.5%) wheat prices declined 30 cents to C$5.40 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Those prices ranged from about C$387.10 per tonne in southeastern Saskatchewan to C$408.00 per tonne in northern Alberta.   

Quoted basis levels varied from location to location and ranged from C$54.90 to C$75.80 per tonne above the futures when using the grain company methodology of quoting the basis as the difference between the U.S. dollar denominated futures and the Canadian dollar cash bids.

When accounting for currency exchange rates by adjusting Canadian prices to United States dollars (C$1=US$0.7575), CWRS bids ranged from US$293.30 to US$309.10 per tonne. That would put the currency adjusted basis levels at about US$23.20 to US$39.00 below the futures.

Looking at it the other way around, if the Minneapolis futures are converted to Canadian dollars, CWRS basis levels across Western Canada ranged from C$17.60 to C$29.50 below the futures.

Average Canada Prairie Red Spring (CPRS, 11.5%) wheat prices lost C$5.70 to C$12.70 per tonne. Bids ranged from C$362.90 per tonne in southeastern Saskatchewan to C$381.20 per tonne in northern Alberta.

Average Canadian Western Amber Durum (CWAD) prices jumped C$42.00 to C$58.90 per tonne, with bids ranging from C$459.20 per tonne in southern Alberta to C$471.90 per tonne in western Manitoba.

The September spring wheat contract in Minneapolis, which most CWRS contracts Canada are based off of, was quoted at US$9.0425 per bushel on July 27, bumping up 2.25 cents on the week.

The Kansas City hard red winter wheat futures, which are now traded in Chicago, are more closely linked to CPRS in Canada. The September Kansas City wheat contract was quoted at US$8.6650 per bushel on July 27, adding 8.25 cents compared to a week ago.

 The September Chicago Board of Trade soft wheat contract settled at US$7.1275 per bushel on July 27, dropping 14.25 cents from the previous week.

The Canadian dollar eased back 0.17 of a cent at 75.75 U.S. cents, which provided some support to Canadian prices. However, during the week, the loonie pushed towards 76 U.S. cents before retreating.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Durum prices in southern Saskatchewan have traded in the $235-$243 per tonne area over the past month, a relatively narrow $8 trading range compared to Canada Western Red Spring (CWRS) wheat, which moved in a $30 range over the same time period.

The solid feed market in southern Alberta is setting a floor for the durum market, while the upside is limited by a lack of excitement on the export side, according to Jerry Klassen, manager of Canadian operations with Swiss-based GAP S.A. Grains and Products in Winnipeg.

The export market is still relatively slow for new-crop business, but old-crop movement has picked up recently, according to Klassen.

Much of the prime durum growing area of southern Saskatchewan is on the dry side, and will need more rain in the upcoming weeks, said Klassen.

Canadian farmers intend to plant 5.02 million acres of durum this year, which would be well below the 6.19 million seeded the previous year and the smallest acreage base since 2014, according to Statistics Canada data.

Canada has exported 3.64 million tonnes of durum during the 2018-19 crop year-to-date, which compares with 3.36 million at the same point a year ago and the five-year average for this time of year of 3.55 million.

Country-specific data is only current up to the end of March, with Turkey and Tunisia both seeing sizeable increases in demand on the year. Algerian demand is down on the year, but Klassen said business there was starting to pick up.

While country-of-origin labelling legislation in Italy has hampered some movement to the major pasta-producing country, exports as of the end of March of 250,000 tonnes were only about 33,000 tonnes behind the year-ago pace.

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

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Italian COOL regulations are set to come into effect in mid-February and require pasta makers in the country to segregate foreign durum, which will add costs and may cut into demand for some Canadian grain. Italy is a major buyer of Canadian durum.

“There’s no doubt that there’s a negative perception for Canadian durum, but the quality, especially this year is phenomenal, and a lot of mills in Italy rely on Canadian durum,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP SA Grains and Products in Winnipeg.

“I think we’re still in a wait-and-see mode how this will play out,” he said, adding “Canadian durum has a fairly good reputation in Italy and Europe and general.”

Concerns over glyphosate residue on Canadian durum have hurt that reputation somewhat and were a factor in the COOL regulations.

However, “last year, it was so dry, I think you’d be hard pressed to find any farmer who used glyphosate on his durum,” said Klassen.

Glyphosate is not an optimal desiccant for durum, he added, and is rarely if ever used for that purpose.

Total Canadian durum exports to all destinations to date of 1.67 million tonnes compare with the 1.78 million tonnes exported during the same period in 2017-18, according to the latest data from the Canadian Grain Commission.

Durum prices are currently in the $270-$275 per tonne area in southern Saskatchewan, according to the latest Price and Data Quotes (PDQ) data. That compares with prices above $300 in August when the industry was concerned over drought conditions in Canada and the northern U.S.

“We had a very strong North American durum market with the drier conditions in Canada and the U.S.,” said Klassen. The market rationed demand at the time, but the yields beat expectations and left Canada with about a million more tonnes of durum than originally expected.

“Right now we’re feeling the effects of the rationing of demand in the first half of the year when we lost demand, and you never get it back,” said Klassen.

“Now the market has gone from rationing demand to a time it needs to encourage demand,” he said, adding “the only way to do that is through lower prices.”

As a result, “the market will be hard pressed to go higher,” he said, pointing to increased competition in the world and the fact that the seasonal nature of the durum market means that much of the demand is already covered for the year.

“At the same time, the farmer is selling about 100,000 tonnes a week which seems sufficient to meet the exports we do have on track,” he said. He thought farmers were probably selling a bit more durum than they would otherwise due to poor prices for other crops, especially pulses.

While farmers are selling enough durum to meet the demand, “we can’t underestimate the power of the farmer to hold back on sales,” said Klassen. Farmers grew a good-quality crop in 2017 and will be prone to storing on-farm for better prices.

Looking ahead to the new crop year, the trade is factoring in about a 15 per cent increase in durum at the expense of specialty crops, according to Klassen.

Canada seeded 5.21 million acres of durum in 2017, harvesting a 4.96 million-tonne crop.

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

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“We’re looking at some fairly high yields given the early estimates… average yields should come in at 47.5 to 48 bushels per acre this year,” said Jerry Klassen, manager of the Canadian office of Swiss-based GAP SA Grains and Produits. “That’s up from last year, which was 34.4 (bushels per acre).”

Some durum in Alberta and along the Saskatchewan border may ready for harvest in late August, but the bulk of crops should be harvested starting around Sept. 10, he said.

“We’re going to be very sensitive to some rains, but I think the frost risk is quite low… probably only 30 per cent of the crop will be vulnerable to frost risk this year,” he said.

With a large quantity can come problems with quality — something Klassen said they are keeping an eye on.

“We’re watching how the fusarium develops and how much farmers are spraying…as you go farther west the fusarium issue seems to be quite a bit less… in the heart of the durum area it seems to be okay,” he said. “There is a large uncertainty as to how that will affect quality.”

Vitreousness is also expected to be an issue, which usually shows up when yields are high because protein in durum is lower, which could also be a downgrading factor, he said.

However, prices are still down $2-$3 a bushel from last year as the market focuses on yield potential, he said.

“Prices for durum in (Canada) are $6 to $6.50 (per bushel) in the elevator system,” Klassen said. “We’ve got a fairly good crop coming in Canada and the U.S. as far as yield goes, and the pressure on the market is coming from anticipation of greater yields.”

The market is slow right now, which is normal for this time of year, Klassen said, but he expects to see more activity as business picks up in September.

“Quality has taken a backseat here but will likely come to the forefront in the next month…that’s when you could see the market take some direction from the quality.” Klassen said.

— Erin DeBooy writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“The only one that’s not selling aggressively is Canada, and we’re losing market share, big time,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP SA Grains and Produits.

European farmers are about 50 to 60 per cent finished harvesting durum, Klassen said, which is putting a damper on prices, as the region’s producers offer lower values.

“The French farmer is selling, the Italian farmer is selling,” he said. “We’re seeing a lot more durum come on the market from Europe.”

Despite heavy rains in France, crop quality is better than expected, Klassen said.

Cool, rainy weather delayed maturity during the growing season, which caused harvest to occur later than normal.

U.S. producers are also putting forward aggressive offers as the market gets a better handle on the size of North American crops, Klassen said.

“I think we’ve had some very good rains, there are still some quality concerns about the upcoming crop, but I think people are very comfortable with the yield potential,” he said.

Canadian elevator bids have dropped, but export offers haven’t changed much, with only minimal bids emerging from the country, Klassen said.

“There’s business going on in the market, and Canada’s not getting the business.”

Delivered elevator durum is between $6.59 and $7.35 per bushel in Western Canada, while new-crop prices are about $6.57 to $7.20, according to data from Prairie Ag Hotwire.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“It’s a very unique situation because we’ve got bigger crops coming,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP SA Grains and Produits.

France, Italy and the U.S. are expected to produce larger crops this year, but even with that pressure looming, the market has stayed quiet, Klassen said.

Old-crop stocks are relatively low quality, he noted, which means the market is at a standstill until trade starts from Canadian and U.S. producers.

Analysts had also anticipated new-crop French and Spanish durum would be on the market by now, but that hasn’t happened.

Italy has been putting out small offers, Klassen said, but still, the market is hard to define due to limited activity.

End users are carrying sufficient stocks for the time being, he added, which is keeping prices at a standstill.

Delivered elevator durum prices are about $7.43-$8.07 per bushel in Saskatchewan and Alberta, while new-crop prices in the same two provinces are about $7.10-$7.77, according to data from Prairie Ag Hotwire.

Exports are down on the year for two main reasons, Klassen said. Bigger crops in competing growing regions mean less room for Canadian product, while last year’s exports were above-average.

Durum exports as of May 29 were at 3.9 million tonnes, compared with 4.2 million tonnes in the same time frame a year prior, according to data from the Canadian Grain Commission.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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“I think what will drive the durum market here now is the overall wheat complex,” said Jerry Klassen, manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits.

Durum’s premium over spring wheat will likely narrow going forward, as global wheat markets build in a risk premium.

“That’s probably going to be more of an influence on durum than the actual durum situation itself,” Klassen said.

New-crop prices are stagnant, he said, while old-crop prices are under slight pressure.

New-crop bids range from $6.02 to $6.42 per bushel in Alberta and Saskatchewan, while delivered elevator durum prices are between $6.87 and $7.66 in those provinces, according to Prairie Ag Hotwire.

“If the market is well-supplied you don’t really see any active price movement, or major price activity,” Klassen said.

Despite those stagnant prices, global durum production is active as harvest nears in Europe and Mexico.

“And at the same time we’re looking at North American seeding acreage intentions,” Klassen said.

Canadian farmers are expected to seed 5.9 million acres of durum this season, according to early estimates from Agriculture and Agri-Food Canada.

The bulk of Europe’s durum harvest takes place in June, Klassen said, adding that the region’s crop is shaping-up well, with bigger crops expected from both Italy and France.

“Right now it’s a critical time for that crop for final quality and yield development.”

Growing conditions in Mexico are also favourable, and yield development in the country is healthy.

The strengthening Canadian dollar is also keeping some pressure on prices.

“The demand so far this crop year hasn’t been very good; we’re lagging marginally on exports compared to last year,” Klassen said.

He expected Canada’s export pace to subside further in the final three months of the crop year, due to harvest in competing regions.

Canadian durum exports as of March 13 were at about three million tonnes, compared with 3.4 million the prior year, according to data from the Canadian Grain Commission.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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The durum market is being weighed on by larger-than-expected producer deliveries throughout January, said Jerry Klassen, manager of the Canadian office for Swiss-based grain trader GAP SA Grains and Produits.

“I think the million-dollar question is ‘At what price does the farmer start to slow down on his sales?'”

One reason for increased selling is volatility in the Canadian dollar.

“The weaker Canadian dollar has been supportive to the cash market, but the world market appears to be softening,” Klassen said.

The durum market also has a soft tone due to slightly larger carryout for major exporters, and similar production expectations next year in the U.S., Canada and Europe, Klassen added.

Despite heightened farmer selling, Canadian durum exports are behind last year’s pace, at 2.1 million tonnes as of Jan. 17 compared with 2.6 million tonnes in the same time frame a year prior, according to Canadian Grain Statistics Weekly.

“Canadian durum exports are lagging last year, sharply,” Klassen said.

Looking forward, analysts are watching North African tenders for price indications.

Dryness in North Africa is providing some psychological support, Klassen said, but that could be limited.

While the region will likely put out tenders for more durum throughout February, the idea is that they will be weaker than in January.

“Over the last four tenders each one is a bit lower. It seems like companies are getting a bit more aggressive on each subsequent tender.”

Delivered elevator durum in Saskatchewan will bring producers about $7.88-$8.82 per bushel, and about $8.34-$8.83 in Alberta, according to Prairie Ag Hotwire.

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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