Current Durum Situation

Did you know?

• The CWB is scrambling for high quality durum right now.   Partly because of the late fall and partly because of the poor quality crop.  In addition, there may be less of last year’s higher quality crop available than the CWB was counting on as much of it was sold by farmers into the domestic feed market to satisfy cash flow needs.

• Terms on sales to Japan include a high protein content, something the CWB is struggling to satisfy right now.  I’m told that the terms will be adjusted for the new crop but the new terms won’t kick in until Jan 1, 2011.  This is just one more problem for the CWB this fall. 

• These struggles are showing up in Vancouver.  On a vessel that the CWB shared with Cargill, the CWB loaded 10,800 tonnes of durum and Cargill loaded 14,700 tonnes of canola.  Cargill loaded the canola in about two days and the CWB took another 21 days to load the durum.  The CWB (farmers) will pay the demurrage bill on the whole vessel.

• Another durum vessel (60,500 tonnes) has been in port since Sept 19 and has yet to finish.  I’m told it’ll be another week before it’s loaded.  It’s been in port long enough for a hefty demurrage bill.  This will be the first time in a very long time that a vessel arrived in September and didn’t leave until November. 

• There is a rumour that the CWB has shipped high grade durum against a sale of feed wheat to South Korea.  The CWB is indeed shipping durum on this sale, but its #4 and #5 durum, which is applicable on most feed wheat sales. 

• Delivery calls on Nos. 1 and 2 CWAD are now in place and the CWB will terminate the first 25% call effective Nov. 29, 2010.  (This is a signal from the CWB to get farmers to deliver; it’s thought that the prospect of losing the delivery opportunity will get guys to deliver.)

• In addition, a Guaranteed Delivery Contract (GDC) with 100% acceptance has been announced for Nos. 1 and 2 CWAD. 

• But there’s another factor.  I’m hearing many producers are angry and frustrated with the poor movement and poor prices on durum; many have said that they believe the CWB dropped the ball on the very high prices we saw a year or two ago.  Whether they did or not is a topic for another debate; in frustration, these growers are saying they refuse to deliver any high quality durum to the CWB until they see a full (and attractive price). 

• Whereas I understand the frustration, holding grain back will not solve the problem.  The CWB will either find the durum somewhere else, or adjust contract terms and possibly pay penalties.  In the process they are already paying demurrage.  But when I say the CWB will pay, it really means durum farmers will pay.  It could also mean the loss of confidence in Canada as a supplier and the loss of future sales to our competitors (remember, the US has a lot of durum right now).  It may be satisfying to hold back to send a message to the CWB, but it will come at a hefty cost to you.  Ironically, it’s your choice.

• The CWB recently released a commentary where they say "recent negative commentary has been circulated to farmers painting a highly misleading picture of the realities of international durum marketing and the decisions made by the CWB as Prairie farmers' durum marketer."  Obviously I thought they were referring to my commentary "Is this the deal you want?"  Reviewing that commentary, I saw that it only spoke of the realities of poor cash flow from durum under the CWB system and what that means to farmers.  I guess there must be some other "negative commentary" out there that I'm not aware of.

• From a farmer's perspective, the durum situation is definitely in a shambles.  But there is good movement available right now and all durum producers should take advantage of it.   

•  The best place right now to send a message is in the director’s election.