2017 Durum Wheat Prices, Market Review

When we started 2017, the market faced a record durum wheat crop in Western Canada and one of the biggest and best quality durum crops ever across the border in the U.S.

More specifically, thanks to nearly 6.2 million acres planted in 2016, Western Canadian farmers harvested a record 7.76 million tonnes of durum wheat. Late-season rains/snow pushed a lot of grain into the feed market though.

In fact, according to Ag Canada, nearly 2.1 million tonnes of the 2016/17 Canadian durum wheat crop went into feed, waste, and dockage column.

That was nearly 7 times what went into that same column a year before the 2015/16 crop.

While Canadian durum exports were strong at a little more than 4.5 million tonnes, it still meant that there were almost 1.9 million tonnes of durum still in the Canadian pipeline by the time the crop year calendar turned into 2017/18.

Accordingly, the Canadian durum stocks-to-use ratio hit a multi-year high of 27%.

In the U.S, 2016/17 ending stocks sat at just 36 million bushels (or just under 1 million tonnes). That was up nearly one-third compared to the previous year.

Why would 2016 numbers matter for 2017?

Well, available North American durum wheat stocks sat at nearly 3 million tonnes as the crop year calendar headed towards 2017/18.

And so, prices sucked as 2017 crept along.

And thus, 2017/18 acres dropped.

Lower 2017/18 Durum Wheat Acres, Production

At the start of 2017 in our Grain Markets Forecast, I said,

“We don’t expect wheat prices to improve too much in 2017, but there will be short-term rallies that will certainly prove profitable. This means selling into strength and making incremental sales as the price goes up – getting greedy will burn you, and you’ll be kicking yourself later (perhaps you are already after missing making sales in November / December?)”

The best prices in the first five months of 2017 came in January. We explored what durum prices did at this time a year ago in a recent GrainCents piece.

As durum prices trickled lower after the January highs, there was intuitively less interest in planting durum in 2017.

In Canada alone, durum acres fell nearly 20% year-over-year – or nearly 1 million acres – to 5.2 million. In the United States, the decline was less pronounced.

However, the lower acreage was compounded by the dry conditions in the American Northern Plains and southern areas of Western Canada.

More acutely, when you don’t get rain for literally anywhere between 5 – 8 weeks, you can’t grow many crops.

Average durum yields in Canada fell 28% year-over-year to 35.3 bushels per acre. That’s also 16% below the five-year average of 42 bushels per acre.

In the U.S., it was worse, with just 25.7 bushels per acre coming off on average. That’s down about 40% from both the previous year and five-year average of 44 and 42 bushels per acre, respectively.

As such, Canadian durum production dropped 36% year-over-year in Canada to just under 5 million tonnes.

We noted previously in GrainCents that we were expecting a much larger Canadian durum crop than what Statistics Canada initially estimated in August of 3.9 million tonnes.

Across the border in the U.S, durum wheat production fell about 28% from last year and nearly 50% from the five-year average. This meant that a little less than 1.5 million tonnes, or just 54.9 million bushels were able to get harvested.

Obviously, echoes of 2013/14 durum prices were running rampant. But the ideas of $12 USD and $15 CAD/bushel durum wheat was unfounded, mainly because of the amount of durum still left in the pipeline. This is something we warned about very specifically in the 2017 half-time grain markets report.

In fact, I timestamped in early August that the high durum wheat prices wouldn’t stick around and that one should be taking advantage of those opportunities. Back then, we saw $10 and even some $11 CAD handles for #2 or better CWAD trading on the FarmLead Marketplace.

What Now for Durum Prices in 2018?

Next week, we’ll be releasing our 2018 durum forecast to subscribers of GrainCents.

Our price outlooks, trends, and forward-looking, actionable insight will allow you to start penciling in gains and prepare yourself for selling opportunities where others are not looking.

This 2018 durum forecast alone is worth more than the $350 USD annual subscription to GrainCents.

This is the best way to accelerate your grain marketing plan in the New Year.

In GrainCents right now, there are 6 different factors that we have identified as either bullish, bearish, or just noise for durum prices. We also identify what percentage you should “be sold” on your 2017/18 old crop durum, as well as where your sales should be on your 2018/19 durum crop.

In addition to daily insight on prices and grain analysis, you’ll get our 2018 durum forecast. Or bundle the drum outlook with another crop category like lentils for a discount (and get the 2018 lentils forecast as well!)

Save money and take your grain marketing to a new level.

The 2018 durum forecast will be available next week to subscribers of this exclusive service.

Go here now to get your copy of the 2018 durum forecast.

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.

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