Durum prices have blown through the roof and are setting records, compensating prairie farmers who don’t have bulging bins this year.
“It’s kind of a lifesaver, because I don’t have much of a crop,” said Blaine Haubrich of Glenbain, Sask.
Haubrich, who farms in the heart of the prairie durum region, saw his crops wilt under the summer heat wave. His best patch yielded 34 bushels per acre. His worst was 18. The average was 25 bu. per acre, and probably less.
In most years that would spell hard financial times ahead, but on Sept. 27, the Canadian Wheat Board released a Pool Return Outlook that boosted the durum forecast by $115 to $132 per tonne from the August PRO.
Read Also
One Beer Market Updates Day 3 – Lentils and beef
Day 3 of the One Beer Market Update at Ag in Motion 2025.
The outlook for No. 1 Canada Western Amber Durum with 13 percent protein is now $442 per tonne or $12.03 per bu. (in-store Vancouver: Saskatchewan elevator prices are about $1.50 less) up from $8.74 just a month ago.
“That’s been a long time coming,” said Haubrich, remembering the last durum peak in the 1970s.
Wheat, malting barley and feed barley PROs also saw significant increases, but not by as much as for durum. Hard red spring wheat was pushed to $8.14 from $7.02 for No. 1 with 13.5 percent protein, malting barley moved up about 60 cents per bu. and feed barley jumped about 70 cents.
David Przednowek, wheat board marketing manager, said the durum price hike may seem audacious, considering that the board needs to calculate an average price for a crop year that doesn’t end for almost another year, but the new price reflects real world conditions that are likely to last.
“Tight durum fundamentals have gotten tighter,” said Przednowek.
The world market has digested the news that Canada and the United States have produced far less of the crop than expected a few months ago. Australia, a small durum exporter, is seeing its crop burn up in a continuing drought, so buyers won’t be able to turn there.
Bad weather in late summer ravaged crops throughout the Mediterranean, creating a serious supply shortfall in a region that consumes a lot of pasta and cous cous.
“People are now settling down with the fact that in Europe, quality really is a serious issue,” said Przednowek.
“There’s not a lot of choice but to import. They have a serious situation over there.”
According to the International Grains Council, world durum production in 2007 is forecast at 32.9 million tonnes, down by 1.1 million from the previous year and the lowest since 2001.
The forecast is 800,000 tonnes smaller than the previous month, mainly due to a further cut in the estimate for Morocco.
Wheat board PROs often appear to lag the spot commercial market, which the board attributes to spot prices being more volatile. Commercial elevator prices in northeast Montana Sept. 28 were $13-$13.20 US per bu., up about $1.65 per bu. from the week before and up $3.15 from two weeks before.
The current U.S. price is about $2.50 Cdn per bu. more than the PRO, basis a prairie elevator.
Setting the PRO in the midst of an unusually strong rally is a challenge, Przednowek said.
“These markets are difficult to predict. I would expect them to remain volatile.”
The U.S. Department of Agriculture last week estimated the American durum crop at 1.95 million tonnes, down from 2.09 million in the last report. That is better than last year’s 1.46 million tonnes, but off from the five-year, 2002-06 average of 2.29 million.
It is a small crop, said farmer adviser Mike Krueger of The Money Farm in Fargo, North Dakota.
“Durum is the one class of wheat that could take stocks to zero this year,” said Krueger.
“That’s what’s being reflected in prices. There isn’t any out there.”
Krueger is encouraging his clients with unpriced grain to consider present prices, even though there’s little reason to believe they will fall over the winter.
“We told people to sell some durum when it was between eight and nine dollars, and today I went to our people and said ‘it’s $12 to $13. Why wouldn’t you sell some more? Maybe sell all of it.’ “
Prairie farmers with bins full of durum will be happy following the September PRO. But the other board grains look lucrative too.
Malting barley prices aren’t scaring off buyers yet.
“We continue to see prices go up and buyers are maybe in a position where they need to buy, or they’re concerned that the market might go higher,” said Przednowek.
“The moves have been so sharp over such a short period. If you’re not covered and you need to be, you’ve got a problem.”
For Haubrich, the joy over high durum prices and disappointment over poor yields have given him a new appreciation for the possibilities of his favourite crop. Even though he produced a poor crop this summer, he managed to get one.
“The durum really hung in there,” said Haubrich. “It was 42 degrees here. It was just unreal. We haven’t had a rain since June.”
