Wheat and durum markets are heading in opposite directions, say analysts.
Dave Reimann, vice-president of Informa Economics, said the outlook is promising for Canada’s biggest crop.
“I’m actually starting to get a little bit bullish on wheat again because so many people vacated the crop last year after it tanked.”
Adding to his optimism are the inability of northern hemisphere farmers to seed as much winter wheat as they normally do, a smaller than expected crop in Australia and early-season weather problems in Argentina.
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“There is actually a chance we’ll see some strength in wheat,” Reimann told the recent Balancing the Bottom Line conference in Saskatoon.
Durum, however, is besieged by big 2008-09 carryover, large global harvests and bloated early season expectations.
“The biggest problem we’ve had is that the (Canadian) Wheat Board in its wisdom gave very, very positive signals with the early (Pool Return Outlooks),” Marlene Boersch, managing partner of Mercantile Consulting Venture Inc., told the Agri-Trend 2009 Farm Forum Event.
That encouraged growers to plant a crop they shouldn’t have, she said. The CWB’s latest PRO for No. 1 13 percent protein durum is $216 per tonne, down from $300 in the March PRO. Boersch sees no prospect for improvement.
Agriculture Canada forecasts 3.9 million tonnes of durum exports this crop year, but Boersch is skeptical.
“As hard as I try I come up with about 3.5 million tonnes. I don’t see a lot of positive signs in that market in terms of demand.”
Key importers had big crops. Production was up 1.5 million tonnes in Algeria and 900,000 tonnes in Morocco.
Canada also faces stiff competition. United States production is up 700,000 tonnes, the largest crop in more than a decade.
Mexico is expected to have 800,000 tonnes available for export compared to 450,000 tonnes historically.
The wheat board says that product will come to market in May and June 2010, putting more pressure on durum prices.
Boersch said durum ranks last out of the 16 crops she analyzed in her 2010 return per acre outlook.
