MARKET OUTLOOK – WHEAT

Markets have recently bumped higher thanks to renewed Chinese demand in U.S. wheat. Trade rumours throughout the beginning of the week first sparked the markets interest and held steady once the word of the two cargos were secured. Argentinian and Australian harvest is underway, and the crops appear to be getting bigger vs smaller. Some reports that Argentina’s 22 mmt crop could be on the light side of production. Quality appears good with some light frost damage in regions but will likely not affect the overall crop. Australia’s crop in the Western region tacked on 1 mmt of tonnage in a recent report. Demand for North American wheat is holding up well as Canadian and U.S. crop exports ahead of last years levels even a few months now into the new crop marketing campaign. Demand is the big figure to be watching going forwards, although it appears to be pricing itself well as global wheat bids are stable to higher. Producer bids for spring wheat in the Canadian prairies have been increasing and basis on the Canadian prairies is doing the heavy lifting (see chart below) and we are still on hold for making big sales for now but are beginning to show interest in some small moves as cashflow and logistics dictate. As we head into winter, another item to watch will be any drought or issues with either the European, Black Sea or U.S winter wheat crops.

MARKET OUTLOOK – DURUM

Global durum markets will begin to look at how the European and North African crops begin to shape up as we enter winter season. Export pace continues to be strong but will need to continue its trajectory. EU import pace is up 28 per cent year-over-year but below the five-year average. Early demand has been promising and the notable 310,000 tonne sale to Algeria in October helped boost export sentiment. Provincial reports point to the crop being larger than Statistics Canada with Saskatchewan provincial crop report pointing to a 39 bpa average for durum vs a 34 bpa average just one year ago. Market prices are flat recently, up off the harvest lows and touching $8.00 in some further eastern prairie regions. Production is expected widely within the market to surpass Statistics Canada’s 6.5 mmt crop. Quality of the crop is a bit of an issue vs last year as there is more durum in the #3 and lower categories. #1 durum carrying a premium in the domestic market. Global import demand expected to drop from 9.2 mmt last year to 8.6 mmt this year, larger global production being penciled in at 37.2 mmt vs last years 36.4 mmt of which Canada will account for 6.5 mmt of that. EU crop at 8.3 mmt vs 7.2 mmt last year. Ending stocks, this year are expected globally at 7.5 mmt vs 6.7 mmt last year and Canadian durum will need to be competitive.