Durum prices expected to dip with increased prairie acreages
The world’s durum crop is doing OK, and good seeding weather on the Prairies will probably alleviate some of the supply concerns hanging over the market, analysts say.
And with prairie durum acreage enouraged by recent strong prices, the result could be larger supplies in 2013-14 and weaker crop prices.
“I think we’ve got some short-term tightness that’s keeping the market supported,” said Chuck Penner of LeftField Commodity Research.
“Once we get into the new (crop) year, if (the prairie crop) gets into the ground well, I think you’ll see some softness.”
New crop prices will depend on seeding conditions on the Prairies and northern U.S. Plains, growing conditions in Europe and harvesting conditions in North Africa.
Most of the world’s durum crops have already been planted and some are well advanced, which means the final prairie acreage and yield is the remaining unknown factor in the supply and demand balance.
“It depends on what happens with our seeding,” said Bruce Burnett, CWB’s chief crop conditions analyst.
Canada dominates world trade in durum, producing far greater amounts of the crop than the domestic market can consume. The U.S. crop is smaller and mostly serves the U.S. domestic market.
European crops serve their domestic markets as well as North Africa.
North Africa is both a key growing region and the world’s most important importing region. The size of its crops directly affect the amount the region must import.
Burnett said North African crops look OK. There are dry parts of Tunisia and pockets of dryness in Algeria, but generally the crop is good quality and a decent size.
“They have received timely enough rainfall to stop yields declining too dramatically,” said Burnett.
“Overall, the crops are looking to be average size in North Africa.”
The Spanish crop also suffered from dryness, but the situation there has improved.
Penner said Statistics Canada’s estimate of 5.1 million acres of durum in Western Canada appears to be “fairly reasonable.”
If it develops well and the North African crop also turns out as well as expected, “that could cut into the export market, and that’s what makes or breaks the durum market every year.”
Jon Driedger of FarmLink Marketing Solutions, who had expected lower acreage than Statistics Canada reported, said the strong cash market will likely make the Statistics Canada number come true.
“That’ll probably go in,” said Driedger.
“They certainly don’t seem to be shying away from it.”
Seeding conditions in southern Alberta and southwestern Saskatchewan have been good, so there has been little weather reason to reduce acreage, the analysts said.
via The Western Producer http://feedproxy.google.com/~r/westernproducer/~3/NshJOsR0sOE/