A potential jump in world durum supplies has prompted the Canadian Wheat Board to lower its new crop Pool Return Outlook by 55 cents per bushel.
The April PRO is $433 per tonne for No. 1 CWAD durum 11.5 percent protein, or $11.78 per bu. at port.
A month ago, the board predicted a durum price of $453 a tonne, or $12.33 per bu.
On April 21 Statistics Canada said durum acres are expected to rise 22.5 percent. It estimated durum plantings will jump to 5.9 million acres this year, compared to 4.8 million acres in 2007.
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The CWB predicted a larger-than-expected desert durum harvest in Mexico and the United States.
Spring wheat PROs also fell, reflecting falling prices on the Minneapolis Grain Exchange over the last month.
Farmers in the European Union, the world’s largest durum producer, have increased acreage by 17 percent.
EU countries are expected to produce about 9.1 million tonnes of durum, according to the International Grains Council (IGC) market report, released April 24.
That bump in world acreage may only exert a short-term drag on the market, said U.S. analyst Erica Peterson, because weather is now the
significant factor in the market.
“The increase in acres doesn’t guarantee the production,” said Peterson, a marketing specialist for the North Dakota Wheat Commission. “We need the weather to go along with it.”
North Dakota produces 73 percent of the U.S. crop. Seeding is ahead of schedule but the western half of the state needs moisture.
“The whole western half is very dry,” said Peterson.
Durum regions of southern Alberta are also dry, said Lee Melvill, an Alberta Agriculture market specialist.
That part of the province got less moisture than western Saskatchewan earlier in April.
Even with the weather concerns, the IGC forecasts world durum production at 38 million tonnes, up 2.9 million from last year.
But that shouldn’t equate to significantly lower prices, because stocks in exporting regions, including Canada, the U.S. and Europe, are tight.
In Canada, durum stocks stood at 1.23 million tonnes at the end of 2006-07, well below the five year average of 4.5 million tonnes. At the end of the current crop year, durum supply is expected to fall to 800,000 tonnes and recover slightly to one million tonnes at the end of 2008-09, according to an April 25 Agriculture Canada forecast.
Even if crucial regions get rain and world production is above average, Peterson is not convinced that the larger supply will push prices down.
“I’m not sure that we’ll get back into a situation we saw a few years ago, where there was almost a surplus, because beginning stocks are so low right now,” she said.
