Farmers who watch the Canadian Wheat Board’s price estimates might be forgiven if they have a sense of deja vu when they see the latest numbers.
In the March pool return outlook for the 1996-97 crop year, the board predicted prices for No. 1 Canada Western amber durum will likely fall somewhere between $208 and $233 per tonne.
While the mid-point of that range is still a healthy $6 per bushel, the board’s estimate has fallen by $12 per tonne from a month ago.
Starting in January last year, the board did the very same thing, dropping its expectations for new-crop durum prices.
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What actually happened to the durum market? It soared. In its estimated pool return also released last week, the board said returns from the 1995-96 durum pool are expected to be $275 per tonne for 1 CWAD (with no protein premium).
Larry Sawatsky, grain analyst for the board in Winnipeg, said farmers reminded the board of its mistake during country meetings this winter and by implication questioned the reliability of its forecasts.
“I have more confidence in this year’s outlook than last year’s outlook,” Sawatsky said.
The reason is conditions in North Africa. Whereas last year a late season frost and then drought devastated the crop in Tunisia, Algeria and Morocco, Sawatsky said the board waited until the crop was more established before making its predictions this year.
Acreage in North Africa has not only recovered but growing conditions are much better.
“Every day that goes by, the North African crop gets closer to getting in the bin,” Sawatsky said. “The outlook becomes more credible.”
Canadian durum farmers can’t ignore this region of the world. It regularly imports nearly half of the world’s durum production.
Another factor in last year’s rally was drought in Spain and Greece.
U.S. durum farmers told the United States Department of Agriculture in early March they intended to plant about five percent more durum this year, while the United Grain Growers predicted Canadian farmers will grow eight percent more durum this year.
The combination of more production in importing nations and higher plantings in exporting nations adds up to a surplus, he said.
The board states outright the forecasts assume normal growing conditions.
If unusual weather happens, like an unforeseen drought in North America, then Sawatsky readily admitted: “We’ll be wrong again.”
