Durum price recovery seen on the horizon

Demand for the crop has been picking up lately through both Vancouver and Thunder Bay; North Africa is particularly strong

Durum demand is picking up big-time.

The crop set weekly export records in weeks 39 and 40 of the 2018-19 crop year, according to Canadian Grain Commission statistics.

Grain companies shipped 247,800 tonnes in the week ending April 28, followed by 268,000 tonnes the week ending May 5.

“It just demonstrates that there is durum demand out there,” said Chuck Penner, analyst with LeftField Commodity Research.

“We have kind of been just ragging on the market and saying how slow it is and how low it is. But guess what? There are things happening.”

Sales have mostly been conducted through Vancouver and the St. Lawrence Seaway with a small amount of business going through Thunder Bay.

Penner said durum has “been a dog” for a long time and that trend continued in the first half of 2018-19 with lackluster exports.

“A good chunk of that was just the lack of European demand,” he said.

But sales have picked up in the second half with spikes in weeks 34, 37, 39 and 40.

“We have had some exceptionally strong demand from particularly North Africa,” said Penner.

The latest detailed monthly export data available from the CGC is for March, when there was 530,000 tonnes of sales. Algeria accounted for 42 percent of those exports.

North African countries are backfilling supply until their new crop comes off in the May through July timeframe.

Penner doesn’t expect Canadian exports to maintain the recent record pace but they don’t need to.

“We just need to have a decent pace through the rest of the year and it will get tight,” he said.

That is why he is bullish durum for the first time in a long time.

Acres are projected to be down in North America with a 19 percent drop in Canada and a 31 percent decline in the United States.

Strategie Grains expects the European Union crop to be the smallest since 2014-15, led by a 25 percent drop in production in France.

North Africa’s crop is about to be harvested and there are big problems in Morocco, where the U.S. Department of Agriculture is forecasting a 49 percent decline in production.

Penner said the durum market has been asleep so long and there is such little transparency in the market that it may take prices a while to respond to the looming tightness.

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