Durum prices might increase a little next year, says an Agriculture Canada forecast, but it is too early to make a firm prediction.
Growers are disappointed this year by the rare occasion of milling wheat prices topping values for the pasta-making grain.
The last time that happened was in 1990-1991.
World durum values in United States currency dropped by half in just a year.
In Canadian currency, the Canadian Wheat Board’s Thunder Bay asking price hit a peak of $370 a tonne in August 1997 and fell recently to about $230.
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But Brian White, wheat board market analyst, said he wouldn’t write off durum in 1999.
“If I were producing grain, I’d have some acreage in durum, provided I was in the right growing area. It can always surprise you and pay off. For example, if it stays dry in North Africa and if we get a bigger cut in acreage than expected in both Canada and the U.S., you could be surprised, especially if the weather doesn’t co-operate,” he said.
But based on the supply and demand outlook, you don’t want to seed the farm to durum, he added.
Durum prices depend on how much North American farmers grow and how much North Africa buys, he said.
Canada and the U.S. normally produce about 85 percent of the world’s durum export supplies and North African imports account for about 50 percent of global trade.
There is lots of durum in North America and that’s not good for prices.
Agriculture Canada said the 1998-99 durum crop is about 6.1 million tonnes, up from 4.35 million last year. Stocks going into the 1999-2000 crop year are expected to be two million tonnes, up from 776,000 tonnes at the start of this crop year and the highest ever.
The U.S. Department of Agriculture says American production is about 3.84 million tonnes in 1998-99, up from 2.34 million. U.S. stocks going into 1999-2000 are expected to be 1.71 million tonnes, up from 700,000.
Demand could increase
But North Africa is dry now, following last winter’s good durum crop. There are news reports that at least one country, Morocco, is already planning to increase cereal imports by 26 percent to make up for production shortfalls.
White said the make-or-break time for the North African durum crop is February-April, so it will be easier to make price predictions in a few months.
“It is so early to make a call and it is early when we put out our first pool return forecast in February. We always feel uneasy about durum because a lot can change … that can make our pool return forecast look stupid in the end. But you can only assume the average until you have more information,” White said.
But Agriculture Canada has made an early forecast.
It said in a December report that lower prices are expected to reduce worldwide durum production by four percent, to 32 million tonnes.
“Large decreases in area in Canada and the U.S. will be partially offset by a larger area in the European Union.”
Although production will drop, the higher carry-in stocks will result in supplies rising by five percent, to 37 million tonnes.
Trade is expected to be up but not enough to prevent 1999-2000 world ending stocks from rising by 10 percent to 5.7 million tonnes, the highest since 1992-93.
But the stronger demand from North Africa should strengthen Canadian prices.
“Durum wheat is expected to be priced at a small premium to spring wheat in 1999-2000, but the premium will remain well below the 10-year average,” the Agriculture Canada report said.
The 1999-2000 pool returns for No. 1 CW amber durum are forecast at $180-220 per tonne at port, compared to the 1998-99 PRO of $174-204 a tonne.
The durum premium over spring wheat is projected at $5 a tonne, compared to a $6 a tonne discount in the 1998-99 PRO.
