The durum price outlook has improved significantly, but is still lower than last year, says the Canadian Wheat Board’s April 26 Pool Return Outlook.
The board expects durum prices to be $13 to $15 per tonne higher than it forecasted in late March. Wheat is expected to be marginally higher, by $1 to $3 per tonne, and malting barley is expected to rise by $3 to $4 per tonne.
There are several reasons for the improved durum outlook.
Drought returned to the durum-growing and consuming area of North Africa, said CWB analyst Peter Watts.
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Also, Canadian farmers told Statistics Canada they intend to cut durum areas by almost one fifth this spring. American farmers might also plant less durum because a lucrative crop insurance program that promoted durum acreage has been withdrawn.
“It’s a better story this month than last month,” said Watts.
North African droughts have boosted durum prices for the past couple of years. Last year’s drought was devastating, which increased prices substantially. This year’s drought, which began in mid-March, is not as bad, but crops along the southern Mediterranean coast are shriveling and yields should be poor.
Lack of moisture
Drought is also affecting prairie farmers’ seeding intentions. Statscan’s seeding intentions report, based on surveys done March 23 to 31, says prairie farmers intend to plant 18 percent fewer acres of durum this year.
That could change, Watts said, if a good rain hits the parched areas of western Saskatchewan and southern Alberta that traditionally grow a lot of durum. Farmers told Statscan they intended to leave a lot of summerfallow acres in those areas.
But many durum growers may also be put off by the CWB’s repeated warnings that it would have difficulty marketing another durum harvest as large as last year’s crop of 5.7 million tonnes. Exports this year are expected to be 3.7 million tones.
Farmers haven’t been able to clean out their bins, Watts said.
“With that big crop, there’s a lot of durum still on farms.”
The price forecast for durum was also helped by a change in an American crop revenue insurance program. Formerly, the program guaranteed farmers a high price for durum. This year, durum prices are guaranteed only at the same level as spring wheat.
But even with the African, Canadian and American situations helping boost the durum price forecast, Watts said the price is still below levels of recent years.
“The PROs year after year are still coming down. We’re still showing a fairly substantial drop, year after year, in durum returns.”
In the 2000-2001 year, No. 1 CWAD with 13 percent protein in-store Vancouver brought $240 per tonne. This year, the same grain is expected to bring $218.
The wheat board also increased its wheat price forecast slightly. World stocks are gradually tightening and there are worries about the United States winter wheat crop and European crop, both of which have been hit by poor growing conditions.
The U.S. winter crop has been pressured by a series of weather extremes and now faces a dry spring.
No. 1 CWRS with 13.5 percent protein is forecast to bring $226 per tonne, or $6.15 per bushel, compared to the forecast of $224 per tonne and $6.10 a bu. last month.
Feed barley was unchanged in this PRO, but malting barley was up by $3 to $4 per tonne.
Malting barley prices look better because of weather problems in western Europe, where heavy rains and cold weather are degrading crops. U.S. acreage is also expected to be lower because of dryness in Montana and competition from other crop choices in North Dakota.
