Given all the sparks in Prairie crop markets lately, and the fact that important production zones of Saskatchewan are affected, some are wondering about upside potential for durum. The idea is that many acres have been lost, yield potential is reduced, and Canada plays a prevalent role in supplying world markets.
The trade seems to agree that the 2010/11 Canadian Wheat Board (CWB) Pool Return Outlook (PRO) will eventually respond by moving higher, but in their latest update – which was released in the third week of June after news of crop problems had taken ahold of the markets – the forecast prices were left unchanged.
Part of the issue in the short-term outlook is 2009/10’s very large ending stocks. At 2.7 million tonnes, we’re going to carry in a supply that about equals the entire crop size for 2010/11. Using the CWB’s recently-released seeded area figure of 3.4 million, and our forecast for average yields of 34 bu/ac (a bit lower than the CWB’s best guess of 34.5 bu/ac), production is forecast at 3 million tonnes in 2010. This is significantly below average, but the impact has been muted thus far.