Wheat stocks are poised to dip to their lowest levels in three decades, but wheat’s cousin, durum, is headed in the other direction.
World durum production is expected to rise by about three percent in 2001, with supplies in the major exporting countries increasing to their highest levels since 1993.
At the same time, demand from some major importers is forecast to decline.
It doesn’t take a marketing genius to figure out what that means for prices.
“With all that durum out there … and less demand, what else can the prices do but go down?” said Glenn Lennox, market analyst with Agriculture Canada.
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The department forecasts durum prices will fall by about five percent in 2001-02, to $205 a tonne for No. 1 CWAD 11.5 percent protein (in-store at export position.)
The premium of durum over spring wheat is projected to shrink to only $5 a tonne, from $24 in the current marketing year.
Only a crop disaster in a major importing or exporting region could turn that around, be it in North Africa, Europe or North America, said Lennox.
Dwayne Lee, market analyst with the Canadian Wheat Board, said the key thing for farmers to track as they consider whether to plant durum is the situation in North Africa.
Drought in that region in the last two years translated into increased demand, which supported world prices. But conditions in that region are looking good this year and a third consecutive poor crop seems unlikely.
“That’s really the area to watch on the demand side,” said Lee.
Agriculture Canada is projecting prairie farmers will seed 6.1 million acres to durum, down from 6.45 million last year, and will produce a crop of 5.35 million tonnes, down from 5.65 million.
However, high carryover stocks entering the year will push total supplies up to 7.65 million tonnes, from 7.44 million tonnes a year ago.
The department projects 2001-02 exports will be unchanged at 3.8 million tonnes, while ending stocks will increase by 13 percent to a record 2.6 million tonnes.
Lennox acknowledged analysts differ about how much durum Canadian farmers will plant. He projects a slight drop in acreage and production, based on the smaller premium for durum over other wheats next year.
But he added that experience shows that when it comes to durum, farmers often seem to react more to what the price is now than what it might be a year from now.
“So they may plant even more, but really I can’t see them doing that, because the price outlook for other wheats is definitely better. There’s going to be negative feedback on durum and a positive feedback on non-durum and that’s why I think no more or slightly down.”
Charlie Pearson, market analyst with Alberta Agriculture, suspects farmers will increase durum acreage in 2001.
“We’re probably going to increase acres of durum next year a little bit, but maybe not to the level some people are expecting.”
