Posted on July, 9, 2024 at 09:36 am
The price spread between spring wheat and durum will likely narrow in 2024-25, says a grain industry analyst.
In fact, this could be one of those rare years where spring wheat momentarily trades at a premium to durum, said GrainFox chief analyst Neil Townsend.
Canadian farmers planted 6.36 million acres of the crop, a 5.5 per cent increase over last year, according to Statistics Canada’s June estimate.
Their counterparts in the United States seeded 2.17 million acres, a 29 per cent bump, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service.
As well, the crops are looking fantastic on both sides of the 49th parallel.
“We could get a crazy big yield if the weather holds the way it is holding right now,” said Townsend.
It is feasible that Canadian growers could harvest 7.5 million tonnes of durum and U.S. farmers another 3.5 million tonnes, for a combined North American crop of 11 million tonnes, he said.
That would be double last year’s output, although he noted that it is early July, and he certainly isn’t penciling in those kinds of eye-popping numbers yet with so much of the growing season remaining.
The U.S. hard red spring wheat crop was rated 72 per cent good to -excellent as of the end of June, up from 48 per cent a year ago.
North Dakota’s durum crop was rated 79 per cent good to excellent, while Montana’s is at 56 per cent.
“I’d say they have trend yield or better potential right now,” said Townsend.
“They’re well hydrated and they haven’t got too much intense heat yet.”
Canada’s wheat and durum crops are in good shape as well.
“Water is just not a problem right now, which has been an issue in three of the last four years,” he said.
Canadian farmers planted 18.94 million acres of spring wheat, 2.8 per cent below last year. U.S. growers seeded 11.27 million acres, which was almost identical to last year.
Townsend said spring wheat and durum prices are at a seasonal bottom right now, so they will likely bounce off today’s values.
However, he thinks it is highly unlikely that spring wheat will maintain its $1.50 to $2.00 per bushel price premium over durum.
There will be price pressure from overseas as well.
The USDA is forecasting 4.4 million tonnes of Turkish production and two million tonnes of exports in 2024-25, which would be another massive export program from the newcomer to the trade.
COCERAL is forecasting 7.27 million tonnes of European Union durum production, with a better crop in Spain offsetting poorer production in Italy. Production will be down one per cent from last year.
Townsend has heard that Russia is expecting two million tonnes of production, which would also be a large crop.
Russia shipped 465,299 tonnes of durum to the EU in 2023, but the bloc has implemented new duties on imported Russian grain, so Russia needs to find a new home for that durum.
Source: Producer