Durum wheat in Canada, “what clarity of confusion”

“Could it be that Canadian buyers are distorting reality against their own farmers so that they are selling merchandise to them?”

With more than 70% of Canadian durum wheat harvested, the news is not encouraging for Andalusian farmers. According to many recognized statesmen, the production would be close to 6 million tons (6 Mt), this would double that of last year.

If we review world production, we stand at around 33 Mt, and an estimated consumption of almost 34 Mt. Regarding initial stocks, they normally exceed 8 Mt, but this year we have started with 5.9. Therefore, ending stocks would end up around 5 Mt, a very low figure historically.

As is known in the world of durum wheat, what happens in Canada is essential for price formation, since it is, by far, the world’s largest exporter.

The price

The price of Canadian durum wheat has fallen more than 50 dollars in the last month, this situation is normal due to the pressure of the harvest itself.

On the other hand, the price in Andalusia is still around €500/t, and if the Canadian news is confirmed, I estimate a floor of around €450/t. Otherwise, we could see €550/t again, that is the range I estimate for this campaign.

But as there are still many months to go, I don’t think there’s any need to get nervous right now. In any case, we must remember that the current price continues to double the average of the last 10 years. It is also true that all the expenses to bring the crops to success have increased considerably.

Reality

In general, the news that comes from Canada is usually distorted towards its own interests. Personally, the 6 Mt that are being said and published with great fanfare do not add up to me. The low rainfall with medium-high temperatures in recent months do not match the announced productions. To make matters worse, they say that the average quality they are obtaining is very good, and normally, good qualities are at odds with good yields.

Could it be that Canadian buyers are distorting reality against their own farmers so that they are selling merchandise to them? Could it be that the merchandise that they are selling now on the decline is the excess that is not going to fit in their barns? Could it be that in the next few months, they do a downward revision and one Mt disappears? With Canadians anything can happen, it wouldn’t be the first time.

Be that as it may, following the markets very closely, most of the time I have bearish or bullish sentiments. Right now I am very confused, in the short term it would be bearish with the news from Canada, but in the medium-long term I think things will change. Because of the distrust that Canadian actors give me, “what clarity of confusion.”