Farmers with low quality durum in their bins are being offered a guaranteed delivery contract by the Canadian Wheat Board.
However, the marketing agency is giving no details on who’s buying it or how big the potential market is.
The board introduced the new GDCs for No. 4 and 5 Canada Western amber durum on Jan. 16, with sign-up running until Jan. 31 or until sufficient volume has been secured.
In announcing the new contracts, the board said they are intended to bring in additional tonnage to meet “nearby sales opportunities.”
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Board spokesperson Maureen Fitzhenry said the agency couldn’t say any more about those sales.
GDCs can be used either to bring in grain after a specific sale has been consummated, or to test the waters before deals are finalized to see how much of a certain quality of grain farmers are willing to sell. Fitzhenry declined to say which might apply to these durum GDCs.
The board will have to find a home this year for large quantities of low quality durum.
An estimated 25 percent of this year’s record 5.9 million tonne crop graded No. 4 or lower, which translates into about 1.5 million tonnes.
That came on top of a 2004 crop that also produced more than a million tonnes of No. 4 or lower, which probably accounts for a good percentage of the 2.5 million tonne carryover into the 2005-06 crop year.
Glenn Lennox, wheat market analyst for Agriculture Canada, said those numbers indicate the board probably has a lot of low quality durum to dispose of.
“It makes sense that they’d have a program in place for lower quality durum,” he said.
While No. 5 durum is definitely a feed quality grain, the No. 4 is almost certainly destined for a milling market, said Lennox.
Over the long term, only about 15 percent of the durum crop grades No. 4 or worse, and that is generally blended up to a No. 3.
“This year, with so much low quality, that’s simply not possible,” said Lennox.
The pool return outlook for No. 5 durum is $116 a tonne (basis export position), the same as Canada Feed, although transportation costs tend to be lower for durum. The PRO for No. 4 is $141, while for No. 3 it’s $155 a tonne.
The board also announced a new GDC on feed wheat, with a sign-up deadline of March 31. That’s the third feed wheat GDC offered so far this crop year.
