Durum resists further sell-off on grain markets

by Agrimoney.com

Durum is, thanks to weak North American sowings, avoiding the worst of the sell-off in grains which continued on futures markets, sending Paris's November wheat lot to a fresh three month low.

Early resilience on grain markets on Thursday gave way to fresh selling, sending November wheat down a further 1.4% to E194.00 a tonne at one point, the weakest for the contract since March.

London wheat lost 0.8% to £162.75 a tonne with Chicago wheat, the world benchmark, losing 0.9% to $6.32 ¾ a bushel as of 10:00 GMT, if remaining well above the lows of the last session.

Prices are being depressed by talk of a significant backlog of shipments to sell from Russia after the lifting of its export ban next week, with dollar-denominated assets also facing the headwind of a 0.8% jump in the greenback against a basket of currencies.

"Russia has got to export this before the new crop arrives anyway, so they are not going to hold out for high prices," a market source told Agrimoney.com.

Against the grain

However, prices of durum wheat, the type used to make pasta, while not quoted on futures markets, remained relatively stable on cash markets, selling for E350 a tonne at France's Port La Nouvelle, according to Agritel, the Paris-based consultancy.

That represented a fall of 1.4% on the day, compared with slides of nearly 5% in soft wheat, and more than 2% in corn and feed barley.

For June overall, durum prices are still nearly 19% up, compared with losses of 15.4% for wheat, at the French port of Rouen, and declines in all other significant crops, including malting barley and feed peas.

This diverengence was echoed in Australia, where AWB, in its first pools update as a Cargill-owned company, on Thursday lifted estimates for durum returns for farmers in eastern states using its wheat pools, while cutting forecasts for all other grain types.

At Aus$375 a tonne, top-quality durum is expected to achieve 7.8% more than benchmark Australian prime wheat over 2010-11.

'Quality risk'

Durum's resilience follows a dismal sowing season in both western Canada and in the northern US states, major producing regions.

"Only 6% of the North Dakota durum crop was planted by the third week of May, which is exceptionally late," the Canadian Wheat Board said.

"Late planting in North America also increases quality risk for the crop, which is supportive of higher-quality values."

Furthermore, while yield results from North African and Spanish crops are expected to turn out strong, late rains have depressed the quality of the crop.

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