February 16 – Durum Getting a Bit More Attention This Spring?

In Canada, Indian tariffs are undoubtedly going to decrease pulse acres in 2018/19.

Does the glass slipper fit for durum?

In Canada, Indian tariffs are undoubtedly going to decrease pulse acres in 2018/19. How will this impact Canadian durum?

The biggest impact will likely be seen in Alberta where we saw a lot more farmers chase lentils and peas prices the past two years. In some of these areas, durum can perform fairly well.

Thus, it’s getting a pretty serious look by a lot of farmers this winter as to what they’re going to put into the ground in a few months for Plant 2018.

Durum has only been seeded at around one-million acres in the past two years. Its average prices make it not the most exciting crop around. However, there is an expected five percent rise in durum acreage this year due to the reduction in pulse crops.

2017’s durum production was some pretty decent quality, and there was plenty of crops carried over from 2016, leading to plenty of durum on the market. Prices are low, but decent in comparison to the rest of the market, in terms of return on investment.

And while durum might no be high-value crop as canola or lentils, it’s a pretty good option this year, relatively speaking.

Specific to Alberta, it can grow fairly well in a lot of areas that usually see dry or hot conditions, alongside some timely rains. Further, durum prices are at least $1 CAD/bushel better than hard red spring wheat.

That being said, we do tend to have a bit of a tendency to assume we “deserve” $9 or $10 CAD/bushel if we’ve got really good quality.

Why though?

Just because that’s what was paid last year?

Welp, it’s a fickle thing, this farming business. Each year can bring out a different dynamic to the market structure, with this current year being no different (this year, the dynamic that is turning things around is Italy not buying much). 

Overall, durum is a good option, but price expectations need to be re-calibrated (something that should be kept in mind heading into the growing season.


Nothing to write home about but durum is getting second looks

Pulse acres are expected to drop this year, and while many are predicting a corresponding rise in canola acres, another crop is drumming up some interest among producers.

Durum does well on Keldon Kulyk’s farm in southeast Alberta, but farmers farther north might struggle with the long-season crop.

“I’ll be interested to see what happens this year with the possible decrease in pulses that could happen in Canada due to all the tariffs,” said Keldon Kulyk, who farms near Gold Spur in the southeastern part of the province.

“There could be more people looking to grow durum.”

Durum production has been hovering around the one-million-acre mark in Alberta for the past two years. But in Alberta, areas typically seeded to pulses are also areas where durum does well, and for many producers, it would be a natural alternative.

Market expert Jonathon Driedger is anticipating about a five per cent increase Prairie-wide.

“If we see pulse acres come down a little bit, maybe some of that slides into durum,” said Driedger, a senior market analyst at FarmLink Marketing Solutions.

“We’re not necessarily looking at a huge bump, but certainly not looking for a decrease.”

Durum prices are “a bit meh,” he said in an interview in mid-January.

Large ending stocks from 2016 carried over into 2017, which led to a smaller crop last year, but a high-quality one. Blending it with lower-quality 2016 stock means there’s adequate supply, with prices reflecting that.

“Buyers don’t necessarily have to show a huge amount of urgency,” said Driedger. “Prices aren’t awful, but they’re certainly down a little bit from what farmers have had in recent years for better-quality durum.”

However, it’s all relative — pretty much every grain and pulse market is well supplied. By that standard, durum prices aren’t bad.

“Durum may not be blowing your hair back on prices, but relative to the alternatives, it still looks better than the other options for these farms,” he said. “It’s really going to vary individually by farm. There are areas where, if it’s between spring wheat and durum, it will come down to yield expectation.”

Production risks

For Kulyk, it’s price.

“Durum is one that’s always done well out here,” said Kulyk, whose father began growing the crop in the 1970s.

“It’s drier and usually hotter, too. With those conditions and timely rains, durum has always seemed to do pretty well on most of our soils.”

While yields are similar to spring wheat, prices are usually 50 cents to $1 higher — although it’s hardly a windfall.

“Prices are not always what you want them to be, and if you factor in paying for trucking, it starts to impact what profit you can actually make,” said Kulyk, whose nearest grain elevator is 70 kilometres away.

“If we can manage to store some of our higher quality and sell at a later date, we’ll probably plan for that.”

Nevertheless, he grows durum every year, and expects to seed 1,400 acres to the crop this spring (compared to 1,000 last year).

Producers with the same idea better be ready for some risk. Durum is one of Kulyk’s earliest-seeded crops, taking roughly 110 days to reach maturity. He can usually get in the field by the middle of April but in other parts of the province, it gets a bit squeaky.

“The growing season is short, and the last couple of years, people have barely been able to get their crop off,” he said. “Five to 10 days can be all the difference come harvest time in specific areas.”

If you grow it, don’t get too hung up on price, said Driedger.

“It seems like durum is one of those crops that producers have an emotional attachment to,” he said. “If farmers grow good-quality durum, they want a good price for it.”

Prices could change a fair bit between now and seeding, he said, and until the crop gets in the ground, it will be hard to say whether dry conditions in the province (if they last) will be good or bad.

At this point, the outcome isn’t looking “super bullish.”

“There are some factors that might give a more favourable outlook going forward, so I think we need to have our antenna up as to whether our outlook might change,” said Driedger.

“There are enough unknowns that we don’t want to assume that the outcome is just going to be more of the same.”

Just have realistic expectations, he added.

“If we have another big crop, we need to make sure price expectations are in line and take advantage of opportunities accordingly.”


H/T: Alberta Farm Express
About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.