January 26 – What’s the Sentiment of Durum Buyers Right Now?

We had an interesting conversation with a major durum buyer recently.

Ready to hear what they said?

I recently chatted with a relatively large durum buyers who had some interesting thoughts to say about the state of the current durum wheat market.

Granted, we can take comments from the buy side with a grain of salt, it’s worth sharing.

First, they talked about the size and quality of the durum crop that came off in Western Canada this year: Their words?

“5 million tonnes of the best quality ever”

Specifically, they mentioned how growers in central areas of the Canadian Prairies are being active sellers but those in the southern, more drier areas are selling some durum, but most are expecting prices to go up because of the dryness.

Sidenote: this is the exact definition of cognitive bias: one grower isn’t worried about moisture and makes sales, while the other is worried a moisture issue and so isn’t as willing to sell. You could argue that they’re thinking about cashflow for next year but I’m just hoping you understand how one can get stuck in peering out only their own window and no one else’s….

Second, they also mentioned the other 2 million tonnes of the 2016/17 crop that was leftover that now was available to blend in with the surprisingly large 2017/18 crop.

They admitted that the downside was the situation with Italy being dead-quiet, and as a result, less than ideal exporting activity, given the size of the crop.

As a second sidenote, we discussed the Italian durum situation a few weeks ago.

The buyer also discussed how US millers are generally covered until seeding and some all the way out til summer.

Finally, the buyer suggested that Canadian acres getting planted to durum this year could touch 6 million acres, despite the dryness.

At 6 million, this would be a 15% jump over last year’s crop and 11% more than the five-year average.

Currently, I’m not as bearish, thinking Canadian durum area will top 5.5 million acres. At today’s prices, one could argue that my estimate is more realistic.

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.