durum marketing

[Daylate]

I was wondering what the errols and Charlies etc.
thought would be a good plan for durum now. I sold
about 40% of it in nov.and was hoping to slowly
move up from $8.50 selling enough through the
winter to get it gone by march. Still sitting on the
rest, I would like to haul it out by end of march,
So my 2 questions would be, is time my enemy,
should I take my lumps and sell it so I can deliver it.
Or would selling it and buying wheat futures be the
way to go if I felt there was movement up from
where it is now.
I sure would like to see the durum future on ice
getting traded more, cause durum doesn't always
follow cereals to get a true value out of it from
another cereal contract.

[charliep]

Will look at some information I get on Monday when I
am back in the office but a couple of comments to
get discussion going.

North American durum like other wheats - good size
and quality. That makes it a follower of other wheat
prices.

North Africa is 50 % of world durum trade and that
crop is growing as we speak (harvest late spring). I
should be following more closely so not sure on
condition of the area. Large area so you have to
follow country by country.

Your selling and shipping schedule are a bit of a
challenge in that I don't think anything exciting in
durum in the short term (next 3 months) unless
things get more ugly when US winter wheat breaks
dormancy (wheat in general) or there are problems in
North Africa (durum specifically).

I think you can put on target prices that too far from
current prices and sell durum when achieved - not
much upside short term. I won't be too excited about
replacing with futures or options. Let the market tell
you it wants to go higher before you step back in.

My risk tolerance would say to look at calls (know the
cost) and be prepared to look at all commodities
(what market is most likely to react to a weather
event, demand boost, etc.). Not a durum strategy but
rather an investment/speculative one/positioning for
rallies.

My two bits on a Sunday morning. Others thoughts.

[charliep]

I should note that durum remains east coast delivery
for the most part so I would watch for better signals
February and March as the system starts to load up
for new shipping season. High quality US exports are
year round. Japan also year round.

[ajl]

I don't think the price will do much until
the bid for acres starts in Mar. and the
seaway is open. At that time I think we
will see higher prices as fundamentally
there is not much durum around. Exports
are well above last years pace. Also some
poorer quality durum has moved into the
feed market. Mind you the grain markets
can ignore fundamentals for a long time.

[Daylate]

Very true about durum into the feed market, never
thought about it, but have 2 different
neighbours(farm together) that sold the rest of there
durum for feed, that they we're previously getting a 3
for. Not sure why they did this but maybe it wasn't
grading as good as the stuff that they had already
sold. I know lots of times dockage can be better too.
I'll have to ask them.

[Daylate]

Very true about durum into the feed market, never
thought about it, but have 2 different
neighbours(farm together) that sold the rest of there
durum for feed, that they we're previously getting a 3
for. Not sure why they did this but maybe it wasn't
grading as good as the stuff that they had already
sold. I know lots of times dockage can be better too.
I'll have to ask them.

[ajl]

On the subject of Durum has anyone
noticed the CGC's data on domestic
disappearance. On Dec 2/2012 they
listed domestic disappearance at 634,000
metric tonne while on Dec 31/2012 they
listed it at 166,000 MT. Apparently
durum millers are manufacturing durum.
Am I reading this wron? Personally I
believe the higher number as more
accurate due to durum in S AB going into
the feed market. It is frustrating
watching the price go down even though
fundamentals are very bullish. At
current rate of disappearance we run out
of durum just like canola. Let the
fireworks begin.

[charliep]

The domestic disappearance numbers for durum are pretty weird all through December. No explanations except I suspect the current numbers are more reflective of reality. I will note that they will spend more time around December 31 cleaning up numbers/checking on things like double counting as these are the numbers used in the Statistics Canada December 31 stocks report.

Didn't respond as I promised but will highlight the research I did indicated nothing fundamentally bullish around durum other than factors in the overall wheat market. My durum carryover for durum this would be 1.5 MMT although carrying on the current export pace would draw things closer to 1 MMT. North African durum crops are early stages but appear to be off to a good start.