Canada Markets

Durum prices have shown strength in recent months with concerns of a smaller crop along with quality issues in the European market. Recent focus is now on the North American crop and the potential for quality issues.

As of the Sept. 14 Crop Progress report for Montana, 38% of the state's durum crop had been harvested, just 1% below the 39% harvested at this time last year, but well below the 60% five-year average. The state received rain and snow as well as freezing weather in the week prior, with the crop rating falling 5% from the previous week to 45% Good to Excellent.

As of Sept. 14, North Dakota's report indicated that 34% of the crop had been harvested, which compares to 61% at this time last year and the five-year average of 68% harvested. The crop was rated at 74% Good to Excellent, down from 77% the previous week.

As of Sept. 8, Saskatchewan's crop report indicated that 6% of the durum crop had been harvested. This compares to 24% harvested in the same period in 2013 and the five-year average of 24.2%.

As of Sept. 9, Alberta's crop report indicates the crop at 15.8% harvested. This compares to the 37.9% reported in the same period in 2013.

DTN's National Durum Index jumped 37 cents per bushel in Monday's trade to end at $9.29/bushel, its highest level since December 2011. Retracement theory would suggest a potential for a test at the 38.2% retracement of the move from the June 2011 high to the May 2012 low which is found at $9.85/bu.

Durum's strength relative to spring wheat is also very pronounced. Durum's price relationship to spring wheat has moved from an 82-cent discount to wheat in May to a premium of $3.75/bu. in Monday's trade (comparing the National Durum Index to the National Spring Wheat Index in U.S. dollars/bu.). The longer-term weekly chart indicates resistance on the spread chart to be found at $ 3.77/bu., just pennies above its current level, while at $5.49/bu. after that.

Cash bids in the Plains and Prairies indicate that cash markets have failed to converge, with bids in North Dakota on DTN price maps ranging from $7.25/bu. to $10.30/bu. U.S., while Prairies bids in Canada fall short of $7/bu. delivered elevator.

As shown on the attached chart, Canada's export quotation for 1 CWAD 13.5% protein is trending higher, with current data indicating quotation $117.60/mt above year-ago levels while also $110.92/mt above the final 2013/14 average. While some of this move is related to weakness in the Canadian dollar, heightened concern surrounding the quality of available supplies is also affecting price levels. Buyers are nervous and will be watching harvest/quality data closely.

DTN 360 Poll

Grain producers across the country are facing a variety of challenges in getting this crop off. What is the greatest challenge faced on your farm or in your area? You can weigh in on DTN's 360 Poll found at the lower right of your DTN Home Page. We welcome any and all e-mails with progress reports from your area. You can reach me directly at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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