Durum Numbers

[charliep]

Just curious if anyone looks at the customer base for durum. I use the CGC export numbers.

http://www.grainscanada.gc.ca/statistics-statistiques/ecgwf-egcfb/2008/exports08-07-
e.pdf

Exports were down given the size but I found it interesting as to the shift in customer base.

Total durum export in 2007/08 were 3.1 mln tonnes versus 4.4 mln tonnes 2006/07.

Exports to western Europe 691,000 tonnes last crop year versus 1.075 MMT in 2006/07 (Italy
main decline).

Exports North Africa 1.4 MMT versus 1.45 MMT 2006/07.

Exports to Asian 268,000 tonnes (606, 000 previous crop year - India/Sri Lanka dropped
out).

Western Hemisphere 783,000 tonnes versus 1.3 MMT in 2006/07. US (home of $20/bu
durum) purchases of Canadian durum 477,000 tonnes versus 636,000 tonnes in 2006/07.

I likely already know a CWB response but find it interesting the CWB durum sales to the
highest prices/lowest transportation cost markets declined while the likely lower
priced/highest ocean freight (expensive crop year) and east coast shipment stayed the same.

[charliep]

More numbers (know you guys love them.

Durum exports to January 11 (CGC) - 1.3 MMT versus 1.7 MMT same period
2008. Down 24 %.

CWB target 3.3 MMT, up 5 % 2007/08. Durum carryover July 31, 2009, 2
MMT versus 800,000 ish 2008. Total disappearance - 4 MMT ish. Stocks
use 50 %. 6 months supply.

Just curious how much durum the CWB forward priced last spring (I assume
US new crop was pretty high). If the CWB had a cashplus program for
durum (ie. like malt barley), how many farmers would have forward priced?
Particularly new farmers who aren't blessed with 100 % equity?

[TOM4CWB]

Charlie,

Informa long term studies prove the top 6 durum customers the CWB has... are in South America... and they don't have the capability to pay normal prices... let alone premiums.

The 'good' well paying markets... are left open for the CWB's agents... clearly the 'single desk' protects CWB agents much more than CDN growers.... and extracts a premium for those multinational agents.

Informa presented this interesting information to WCWGA the 8th ... and I easily could see this from the analysis... especially when you add it to the info you just presented.

The long and short of the Canadian Durum market... is we (the designated area)are the global residual supplier... and are required to take the inventory losses as growers... as well as the lowest durum prices. That is a simple result of the facts of whom we sell our durum to... and how it is marketed!

[cropduster]

Ooohhh ,but just wait T4,the NEW graduated employee pay structure at the CWB should help that ?????

[charliep]

tom4cwb

Informa did the analysis on South American because of data availability but they are
not the top 6 customers.

Top customers (10 year CWB 2006/07 statistic tables - http://www.cwb.ca/public/en/library/publications/popups/pdf/stats_english2006-
07.pdf)

Algeria - 965,000 tonnes
Morocco - 444,000 tonnes
US - 423,000 tonnes
Italy - 407,000 tonnes
Venezuala - 320,000 tonnes
and last in this list - domestic Canada - 315,000 tonnes

[charliep]

By the way, the Informa Economics study did look at Algeria and Morocco
in their price analysis.

by the way, thanks to TOM4CWB, Jagfarms et al for encouraging me to
blow the dust off the Informa study. I encourage all to take the time to
print and read the study over.

[charliep]

http://www1.agric.gov.ab.ca/$Department/deptdocs.nsf/all/agc6751/$FILE/informafin
alreport.pdf

[TOM4CWB]

Charlie,

You missed what the definition of what the 6 'best' customers are... in terms of more than tonnes of product sold!

The South American customers had the most consistent purchases as a % of purchases... and the highest totals of CWB market share... where the CWB 'single desk' had the most opportunity to extract a market power.

Algeria is not a consistent customer... just like the US... they are like yoyo's in the market... and the loyalty to the CWB as a supplier.

VOLUME is not the main measure... of who is the best CWB durum customer!

This was how it was explained to us... and it made logical sense... from the proving aspect of the CWB 'single desk' for 'market power'.

[chaffmeister]

Ian White, CEO of the CWB, speaking to reporters about durum after presenting to Crop Production Week:

“We'll be trying very hard to make sure we get maximum sales into that market . . . but with a crop of 5.5 million tonnes against a total world market of 7.1 million tonnes, we are going to expect to have some carryover in durum this year" as well as significant price reductions, he said.

Maximum sales?
Significant price reductions?

I thought they held back on sales to support the price?

Significant price reductions are expected because of global production increases. Production increases are a direct response to last year’s huge prices. Since some of you believe the CWB had a hand in those high prices (by reducing the amount available), you better credit the CWB for the huge drop in price too.

Last year’s final pool return: $13.92/bu
Current PRO: $9.66/bu
Down $4.26/bu

[mbratrud]

Kostal said trade sources advise CWB recently becoming more aggressive with offshore pricing; indicating US $230/t
instore St Lawrence for #3 CWAD (note the 3 CWAD PRO is C $320/t). They reportedly indicating $270/t for 2 CWAD but likely would take $250/t. Last Tunisia tender went for US
$250/t landed (option origin).

Not looking good for The Durum Pro.