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Adequate supply of milling durum reassures buyers, but limits price

The good side of a flaccid market is that buyers won’t shy away from trying to buy Canadian durum this winter, says a member of Canada’s New Crop Missions.

Whatever happens to prices, the buyers aren’t going to bail on Canada.

“There is still some good production available,” Lane Stockbrugger, a farmer from Englefeld, Sask., said about the message that the mission he was on took to Algeria, Morocco, Italy and England.

“Yes, there is still good quality production available out there for your 2017 production needs.”

Stockbrugger said buyers in North Africa and Europe seemed worried about reports of bad Canadian growing and harvesting conditions this year, but he and other members of the mission were happy to take Statistics Canada’s newest estimate of ample 2016 durum production and reassure them that they didn’t need to switch to other sources.

“It put them at ease,” said Stockbrugger.

Prices for western Canadian durum since harvest have been poorer than many hoped. Bad late summer weather and terrible harvesting conditions in many areas allowed some farmers to hope for a rally so that they might make up in higher prices what they lost in lower and damaged production.

Price bounced off lows set in September but peaked in November and have now fallen back again to the level they were late last winter and spring, according to the PDQInfo.ca website.

“Each subsequent (offshore) tender, the prices are edging down,” said FarmLink Marketing analyst Neil Townsend about recent prairie cash bids

Adviser Mike Krueger from Fargo, North Dakota, said he has noticed the same phenomenon of weak prices and no signs of buyer worries.

“I’m not hearing much at all,” said Krueger.

“I really thought by now that we’d be seeing a little appreciation in durum prices, just because of the quality issues in Europe and Canada and here, but we haven’t seen any appreciation at all.”

Widespread reports of massive quality damage haven’t prompted durum buyers to aggressively chase quality durum, which was supposed to be in short supply.

“The U.S. market never really responded like there was a shortage of quality durum,” said Townsend, who estimates that Canada has a 2016-17 supply of more than five million tonnes of No. 1, 2 and 3 durum.

For most buyers, that is enough.

Stockbrugger said he was pleased as a farmer to see that Canada’s overseas buyers specifically want to buy Canadian durum because it has a reputation for high quality and consistency. That’s an advantage in a competitive world market where other exporters are trying to push in. Canada will have an edge as long as Canada offers more consistency and quality.

“They’ve come to expect Canadian production,” Stockbrugger said two days after returning to his farm.

“We produce some of the highest quality grains, and while we know that, the quality is very, very important to those markets, so they expect that quality year after year.

“It’s almost like we can’t let our guard down. We need to continually be innovating and doing the next best thing.”

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